Abu Dhabi’s IPIC Raises Cepsa Stake for EU3.3 Billion

By Paul Tobin and Arif Sharif

March 31 (Bloomberg) -- International Petroleum Investment Co., an Abu Dhabi government-owned company, agreed to invest 3.3 billion euros ($4.4 billion) to raise its stake in Cia Espanola de Petroleos SA, Spain’s second-largest oil producer.

IPIC will boost its interest in Cepsa to about 47 percent from 9.5 percent by acquiring stakes from Banco Santander SA and Union Fenosa SA at 33 euros a share, the Abu Dhabi-based company said today in a statement. Cepsa rose as much as 2.1 percent 32.15 euros in Madrid and was trading at 31.97 euros at 9:46 a.m. local time.

IPIC’s stake purchase in Cepsa is its second acquisition this month. IPIC unit Aabar Investments PJSC said March 22 it bought a 9.1 percent stake in Daimler AG, the world’s second- biggest luxury carmaker, for $2.7 billion. IPIC Chief Executive Officer Khadem al-Qubaisi said Jan. 10 the company aimed to boost its holdings to as much as $20 billion in the next five years from $12 billion to $15 billion now, as it seeks to benefit from falling asset prices globally.

“IPIC will endeavor to play an active and constructive role in Cepsa’s development,” the company said in the statement. The transaction requires regulatory approvals and is subject to the availability of financing for the deal, it said.

The agreement will make IPIC the second-largest investor in Madrid-based Cepsa after Total SA, Europe’s third-biggest oil company. Santander agreed to sell its 32.5 percent stake in Cepsa, while Fenosa will sell its 5 percent stake.

Santander

The transaction helps Santander raise cash amid increasing loan defaults. Bad loans at the bank more than doubled to 14.2 billion euros in 2008. Santander, which raised 7.2 billion euros with a rights offering in November, ended last year with a core capital of 7.23 percent, up from 6.31 percent in September.

Abu Dhabi, holder of 8 percent of the world’s oil reserves, is the biggest and richest of the seven states that make up the United Arab Emirates. Abu Dhabi government-backed investment vehicles have announced plans to expand their holdings by at least $12 billion over the next five years as part of a plan to use its oil surpluses to diversify the emirate’s economy.

IPIC on March 30 received antitrust clearance form the U.S. Federal Trade Commission to buy Nova Chemicals Corp., Canada’s largest chemical maker, for $499 million in cash. It earlier this month got approval from European Union regulators for its plan to buy a 70 percent stake in MAN AG’s Ferrostaal industrial-services units for 631 million euros.

To contact the reporter on this story: Paul Tobin in Madrid at ptobin@bloomberg.netArif Sharif in Dubai at asharif2@bloomberg.net