Abu-Dhabi Company To Take 9.1 percent stake in Daimler AG

March 23, 2009

Aabar Investment PJSC has announced it will pay almost 2 billion euro (approx. $2.72 billion) to take a 9.1 percent stake in Daimler AG, the parent company of the Mercedes-Benz luxury marque. This will make Aabar Mercedes-Benz' largest single shareholder.

Smart fortwo ed

Smart fortwo ed

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Aabar is itself an investment vehicle organized by the Persian Gulf sheikdom, which has just fortified Aabar with $1.41 billion. This gives the UAE government majority control of Aabar, a concern unique from other well-funded Persian Gulf funds in that it's partially a public entity (less so, now, with the UAE's majority stake). The goverment-owned entity that paid out the $1.41 billion for Aabar is the International Petroleum Investment Co. of Abu Dhabi, or IPIC, which holds the majority of the Persian Gulf's enormous oil riches. The new investment, once complete, will bring the government's ownership of Aabar from 36 percent to 71 percent.

Other massive IPIC investents include AIG Private Bank Ltd., a Swiss wealth-management subsidiary of the now-infamous AIG; British bank Barclays PLC; and the English football team Manchester City.

What might the ramifications of this investment into Daimler AG mean for Mercedes' direction and future product offerings? Green Benz vehicles like the Mercedes S400 Hybrid are clearly on track for production, and currently 100 Smart all-electric "fortwo ed" models are roaming European streets in a beta test of lithium-ion battery technology.

Do powerful families in the Persian Gulf wish to diversify and reap a portion of the profits from green technology, seeing the reduced energy consumption handwriting on the wall, or might they be attempting to slow the development of frugal vehicles that will consume less and less of their vast reserves of oil?

[source: Detroit News]

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