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6| pfi | Middle East Report 2009 IPIC


IPIC goes shopping


selves treated like royalty. This has meant that the ruler of Abu Dhabi, Sheikh Khalifa bin Zayed Al Nahyan, and the vast sums of petrodollars that his oil-rich emirate accu- mulated when oil prices were booming and breaking records, has been treated particularly well. Everyone from banks to football teams have been courting Middle Eastern oil wealth to help repair tattered balance sheets and rescue them from the financial abyss; meaning the likes of Abu Dhabi and its GCC brethren have been able to pick up stakes in global corporates at very preferential rates.


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Such preferential rates and depressed valuations have meant a number of prestigious corporate names now find themselves partly or fully controlled by the Al Nahyan family. But while Abu Dhabi is the name that every busi- nessman and woman associates with this recent acqui- sitions spree, much of it can be attributed to one name under the Abu Dhabi umbrella: the International Petro- leum Investment Company (IPIC).


Over the past few months, this 100% government- controlled fund has been the busiest architect of M&A activity in the Gulf. These purchases have not only allowed Abu Dhabi to extend its international reach but have established IPIC as a player with global ambitions. IPIC has come a long way since it was established by decree in 1984 as a 50/50 joint venture between the Abu Dhabi Investment Authority (ADIA) and the Abu Dhabi National Oil Company (ADNOC). Brought under direct government control two years later, it has since moved towards developing Abu Dhabi's influence in the global hydrocarbons business by investing in


s the saying goes: "In the land of the blind, the one-eyed man is king." So in the current cash-strapped global econ- omy that we have all found ourselves in during the last few months, any- one with spare cash has found them-


The Abu


Dhabi fund’s recent acqui- sition spree is helping it become a major global player, writes David French.


different downstream projects both in the UAE and else- where in the world.


Its modus operandi is to invest in a minority stake, often between 25% and 40%, as a long-term strategic player. While much of its international investments have only occurred in the last couple of years, it has long been involved in important downstream projects at home. The biggest current scheme is the construction of the US$1bn Abu Dhabi Crude Oil Pipeline, which is due to begin oper- ations in September 2010. However, it is also due to have a 40% stake in Chemicals Industrial City, along with the Abu Dhabi Investment Council (40%) and ADNOC (20%). The first stage of this project, the US$15bn–$20bn Naph- tha unit, is currently looking for a financial adviser. As well as the domestic projects it is involved in, the importance of IPIC to Abu Dhabi can be seen by looking at its board members. Its list of directors contains the majority of the upper echelons of the Abu Dhabi business community, including four members of the Supreme Petroleum Council. It is headed by the UAE Minister of Presidential Affairs, Sheikh Mansour Bin Zayed Al Nahyan, and also includes the CEO of ADNOC, Yousef Omair Bin Yousef, the Undersecretary of the Abu Dhabi Department of Finance, Hamad Al Hurr Al Suwaidi, and the UAE Minister of Energy, Mohamed bin Dha'en Al Hamili. Despite its high status within Abu Dhabi and the wider


UAE, it has only been in the last couple of years that IPIC has asserted itself on the world stage. Prior to 2008, it had slowly built up stakes in specific partners, including Austria's OMV and Borealis (the latter controlled in a 65/35 split with OMV) and South Korea's Hyundai Oilbank. It also agreed to acquire a 20% stake in Japan's Cosmo Oil in September 2007 for ¥89.8bn (US$776m). However, it has been in the last 18 months that IPIC has undertaken a rapid expansion of its investment portfo- lio. As well as adding further hydrocarbon assets, it has begun to branch out into other areas, including chemi-


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