Abu Dhabi to merge IPIC, Mubadala investment funds

The merger will create a new entity that will hold roughly $135bn in combined assets

The tie-up would 'create greater benefits and enhanced economic value' for the Abu Dhabi government.
The tie-up would 'create greater benefits and enhanced economic value' for the Abu Dhabi government.

His Highness Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi, Deputy Supreme Commander of the UAE Armed Forces and Chairman of the Abu Dhabi Executive Council has ordered the merger of two prominent government wealth funds, streamlining the country's investment strategy as it weathers a slump in oil prices.

The resolution will combine the two Abu Dhabi government-owned investment funds – Mubadala Development Company and the International Petroleum Investment Company (IPIC) – into a new entity that will hold roughly $135bn in assets across businesses ranging from computer chips to renewable energy.

State news agency WAM said the tie-up would ‘create greater benefits and enhanced economic value’ for the Abu Dhabi government.

Mubadala's holdings include semiconductor maker Globalfoundries and renewable energy company Masdar, as well as stakes in Fairfield, General Electric Co. and Washington-based private equity firm The Carlyle Group.

IPIC holds stakes in several energy-related companies and owns most of Abu Dhabi-based Aabar Investments, whose holdings include partial ownership of space tourism startup Virgin Gallactic.

The Abu Dhabi companies' most recent financial statements show that Mubadala holds about $67bn in assets and IPIC $68bn. They together carry about $42bn in debt.

The drop in oil prices over the past two years has led to a widening deficit and a slowdown in the UAE economy, and has prompted the government to cut back on generous energy subsidies.

Abu Dhabi controls the bulk of the OPEC member's 98bn barrels of oil reserves, the world's seventh largest.

The merger plans come ten days after Abu Dhabi's First Gulf Bank and the National Bank of Abu Dhabi said they have begun talking about a possible tie-up.

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