Abu Dhabi's Mubadala raises $1.5bn ahead of IPIC merger

The merged entity, which will be known as Mubadala Investment Co, will have combined assets of $125 billion

Mubadala CEO Khaldoon Al Mubarak

Mubadala CEO Khaldoon Al Mubarak

Mubadala Development Co, the Abu Dhabi sovereign wealth fund merging with International Petroleum Investment Co, raised $1.5 billion through a dual-tranche bond after receiving almost four times that amount in bids, people familiar with the matter said.

The company on Tuesday sold $850 million in seven-year debt at 100 basis points over mid-swaps and $650 million in the 12-year tranche at 140 basis points over mid-swaps, the people said, asking not to be identified because the information is private. The sale received orders of about $5.7 billion, they said.

Mubadala, which is tasked with making investments that will help diversify Abu Dhabi’s economy away from oil, is merging with IPIC to cut costs as crude continues to trade at half the price in mid-2014. Abu Dhabi holds about 6 percent of the world’s oil reserves.

The merged entity, which will be known as Mubadala Investment Co, will have combined assets of $125 billion. It will start operations in May with four divisions focusing on the emirate’s interests in energy, infrastructure, technology and aerospace.

Mubadala said in March that its 2016 net income almost tripled to 3.32 billion dirhams ($900 million), boosted by investments in “strategic sectors.”

Barclays Plc, HSBC Bank Plc, Natixis SA, National Bank of Abu Dhabi, SMBC Nikko

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