Abu Dhabi's Aabar said to seek $2.5bn to refinance loan

Sources say state fund is in preliminary talks with a small group of banks regarding the financing

(Image courtesy: www.ipic.ae)

(Image courtesy: www.ipic.ae)

Abu Dhabi state fund Aabar Investments is seeking to borrow $2.5 billion from banks to refinance a loan coming due in April, sources aware of the matter said on Monday.

The state-linked firm is in talks with a small group of banks regarding the financing, the sources said, adding the talks were at the preliminary stage.

The loan will be supported by its parent company, International Petroleum Investment Co (IPIC), said two of the sources without divulging the nature of support.

Aabar, with stakes in companies including UniCredit , Dubai-listed builder Arabtec and Richard Branson's Virgin Galactic, declined to comment.

The 2013 loan that the new financing will replace was also backed by IPIC, which promised to stand behind Aabar should it have difficulty in making the repayment.

Aabar has a chequered past, having borrowed aggressively to build up its holdings around the turn of the decade but then suffering heavy losses as investments turned sour. For example, IPIC's 2011 net profit was all but wiped out due to losses worth $3.42 billion by Aabar's holdings in German carmaker Daimler and UniCredit.

It has since kept a lower profile as it seeks to repair its reputation within Abu Dhabi and manage its existing commitments.

Aabar manages a portfolio of investments spanning real estate to aerospace and financial services to energy.

The 2013 loan was split between tranches lasting three and five years, which were each denominated in dollars, UAE dirhams and euros. Among the banks to have backed the loan were Bank of America-Merrill Lynch, HSBC, JP Morgan and National Bank of Abu Dhabi, according to Thomson Reuters data.

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