Aabar Investments raises $1.76bn in bond sale

Keen investor interest prompts Abu Dhabi investment firm to increase size of the deal
Aabar Investments CEO Mohamed Badawy Al-Husseiny.
By Reuters
Tue 24 May 2011 09:14 PM

Abu Dhabi's Aabar Investments raised 1.25 billion euros ($1.76 billion) from the sale of bonds exchangeable into the German automaker Daimler's stock, after keen investor interest prompted it to increase the size of the deal.

Earlier on Tuesday, the sovereign fund said it would issue a five-year 750 million euro exchangeable bond. But during the day, the size of the deal was raised to 1.25 billion euros.

Aabar, which owns 9.1 percent of Daimler and said it remained committed to the company and its management, set the exchange price at 62.4 euros - a 30 percent premium to Daimler's average share price between launch and pricing.

The bonds, which will be listed in Frankfurt, will carry a coupon of 4.0 percent and the proceeds from the sale will be used for "general corporate purposes", Aabar said.

At the new deal size, the bonds will represent about 20 million Daimler shares, or 1.9 percent of the total, Aabar said.

"In launching the bonds, Aabar is taking advantage of the current market conditions and the attractive financing the equity-linked market currently offers," it said.

Aabar, which delisted from the Abu Dhabi bourse last year, bought its Daimler stake in March 2009 for around $2.7 billion.

Aabar also said it had made derivative transactions on a number of Daimler shares with a counterparty who would buy the automakers' shares at the same time as the bond launch to hedge its exposure.

The sale was run by Bank of America Merrill Lynch , Deutsche Bank and Morgan Stanley .

Aabar, majority owned by Abu Dhabi government investment vehicle International Petroleum Investment Corp (IPIC), is the largest investor in the recent Glencore IPO, having committed $850 million to the listing.

It also has stakes in Italian lender UniCredit and Virgin Galactic.

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