March 23, 2009 / 5:51 AM / 10 years ago

Abu Dhabi's Aabar hikes capital after Daimler stake

DUBAI (Reuters) - Abu Dhabi-government linked Aabar Investment AABAR.AD completed a $1.82 billion (1.25 billion pound) capital raising on Monday after taking a surprise 9.1 percent stake in Daimler (DAIGn.DE) that made it the biggest stakeholder in the German car company.

Abu Dhabi’s International Petroleum Investment Company (IPIC) said in a statement it completed its planned purchase of the second and final tranche of convertible bonds issued by Aabar for a total 5.2 billion dirhams (973.6 million pounds).

The conversion comes one day after Aabar took a 9.1 percent stake in ailing German car giant Daimler (DAIGn.DE) worth 1.95 billion euros (1.83 billion pounds) in a surprise move. AABAR.AD-DAIGn.DE-E

The deal underscores the financial muscle that some energy exporters in Gulf Arab region can flex during the downturn. The Aabar stake will push the Emirate of Kuwait down to second place on the Daimler shareholder roster with a stake of 6.9 percent.

Following the conversion, IPIC has invested a total of 6.68 billion dirhams in Aabar through a bond deal unveiled in September, when IPIC said it aimed to help the firm invest in sectors across the region, including in energy.

Gulf Arab states are keen to diversify their economic base away from energy extraction into manufacturing and services and sovereign investors such as IPIC have assisted by taking stakes in companies abroad in exchange for jobs or know-how.

Daimler will issue some 96.4 million new shares to Aabar for a price of 20.27 euros each, a 5 percent discount to Friday’s closing price, through a 10 percent capital increase.

IPIC will convert the mandatory convertible bonds into new ordinary shares in Aabar at a premium 3 dirhams per share, Aabar last traded at 1.76 dirhams per share.

Following conversion of both tranches of the bond issue, IPIC’s share in Aabar will rise to 71 percent, the statement said.

Reporting by Thomas Atkins; Editing by Anshuman Daga

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