Aabar Investments, the Abu Dhabi sovereign wealth fund, has said it will buy shares of Glencore to the tune of $1bn during commodity trader’s initial public offering, making it the biggest investor in the company.
The purchase will further diversify Abu Dhabi’s investment portfolio and smooth the way to cooperation in the marketing of its hydrocarbons and petrochemicals.
Aabar will initially invest $850m in the initial public offering of the commodities giant and will acquire an additional $150m in shares in the subscription process, making Aabar Glencore’s largest cornerstone investor.
Glencore has priced its shares between 480 pence and 580 pence, and aims to raise $11bn in a dual listing on the London and Hong Kong stock exchanges. This would value the company at $61bn.
The purchase continues Abu Dhabi’s strategy of building up a strategic investment portfolio in the hydrocarbons sector. Aabar is a subsidiary of government-owned International Petroleum Investment Cooperation (Ipic), which last month announced it was going ahead with the construction of a $3bn refinery in the northern emirate of Fujairah. It has plans for similar projects in Oman and Morocco.
Glencore shocked the business community when it revealed the extent of its dominance in commodity trading. It controls 60 per cent of the third-party zinc market, 50 per cent of copper, 45 per cent of lead, 38 per cent of alumina and almost a third of thermal coal.
“We are excited about the potential opportunities between Abu Dhabi and Glencore given Abu Dhabi’s leadership in petrochemicals and hydrocarbons domestically and around the world. The investment is consistent with our policy of investments and strategic partnerships with global market leading businesses,” Khadem al-Qubaisi, Aabar’s chairman, said in a statement.
“Given Aabar’s focus on value enhancing investments and the great opportunity that global commodities offer we intend to explore in due course areas of co-operation between the two firms,” said Mohamed Al-Husseiny, chief executive officer, Aabar.
Aabar already has stakes in a diverse range of businesses, including German carmaker Daimler, Spanish bank Santander, Italian infrastructure company Atlantia, and the UK’s Virgin Galactic, a space tourism enterprise.