June 23, 2010 / 10:45 AM / in 7 years

UAE's Aabar delisting plan unsettles investors

* Analysts say being private suits Aabar’s strategy

* Company seen taking advantage of low share price

* Minority investors confused by company move

* Investment firm has stakes in Daimler and Virgin Galactic

By Dinesh Nair and Stanley Carvalho

ABU DHABI, June 23 (Reuters) - State-owned fund Aabar AABAR.AD has always stood out for its rapid growth and high-profile purchases but the world’s only listed sovereign wealth fund is now making investors nervous with its plans to go private.

Aabar, majority-owned by the government of Abu Dhabi, shocked investors on Monday when it announced it was considering delisting from the Abu-Dhabi bourse and converting to a private joint stock company. [ID:nWEA6884]

Aabar thus would move from being one of the most transparent sovereign funds, most of whom operate in complete secrecy, back into the shadows and become the first delisting of a local firm from the Abu Dhabi bourse.

“Being a public company is not easy. It is a good move to go private as it (Aabar) couldn’t handle the limelight of a public company and disclosures,” said Mohamed Yasin, managing director of Shuaa Securities in Dubai.

But the firm’s delisting plans have left minority shareholders confused and nervous.

Aside from a statement saying that the company may call an extraordinary general meeting to consider delisting, Aabar has not stated why it is delisting to convert into a private joint stock company or what would be the fate of the public shareholders.

Aabar officials did not answer phone calls from Reuters seeking comment.

“There’s a lot of speculation and everyone is asking what happens to the remaining shareholders. The risk here is that speculators do not use this period to take advantage,” said an Abu Dhabi-based senior banker who did not want to be identified. “It is not the fault of the company but it is their duty to quell rumours floating around that could lead to abuse of the share price,” the banker said. Industry observers also say the company may be trying to take advantage of its relatively low share price. Its shares have lost more than 13 percent so far this year and are down 8 percent in the last one year.

“If you are an investment company holding a range of portfolio assets, then a decline in the value of your portfolio can have a compounding effect on the stock in a declining market,” said Khuram Maqsood, a former investment director at Dubai-based investment firm.

“Portfolios of many investment companies are struggling after the crisis and I think they are taking advantage of that drop.”

TRANSFORMER

Aabar’s transformation has been swift and rapid ever since its inception in 2005 as a small energy company.

It sold most of its energy assets shortly after formation, and government investment vehicle International Petroleum Investment Corporation (IPIC) acquired a majority stake in Aabar, which soon emerged as one of the most active investment funds in the region.

The firm, with estimated assets of $10 billion, hit the headlines last year by picking up a 9.1 percent stake in Daimler (DAIGn.DE) for about $2.7 billion and a 32 percent stake worth $280 million in Virgin Group’s space travel unit Galactic.

Aabar has been relatively quite this year with its investment plans but a potential delisting may only confirm its evolving strategy of being a state-owned investment firm.

Aabar IPO in November 2005 was oversubscribed 800 times. IPIC owns 71 percent stake and the rest is being held by minority shareholders. (Additional reporting by Enjy Kiwan in Dubai; Editing by Hans Peters)

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