Daimler Deal Shows SWFs Still On The Scene

March 22 saw Abu Dhabi's part state-owned investment fund Aabar Investments take a 9.1% stake in German auto giant Daimler, in a EUR1.95bn (US$2.66bn) deal that further underlines CFW's view that Middle Eastern Sovereign Wealth Funds (SWFs) would continue to make long-term strategic investments in major Western corporates, albeit outside the financial sector where only recently many snapped up assets (see 'TAQA's Acquisition Wave Powers On', CFW, February 20 2009). The deal will make Aabar the firm's largest shareholder, surpassing Kuwait, which will have its share reduced from 7.6% to 6.9%. Although the deal will dilute existing shareholders, CFW believes that the cash injection has likely saved Daimler from having to undertake a discounted rights issue, and Aabar's investment (at EUR20.27 per share) was priced at only a small discount to Daimler's closing price of EUR21.34 on March 20.

To read the full article, please choose one of the following options: