From the Newsroom*
São Paulo – The Abu Dhabi Investment Authority (ADIA), responsible for investing US$ 650 billion in funds in the emirate of Abu Dhabi, the world’s sixth largest oil exporter, purchased 4.9% of United States-based financial group Citigroup for US$ 7.5 billion, according to information from Dubai newspaper Khaleej Times.
With the purchase, according to the Market Watch Website, of the Dow Jones group, ADIA has now become the leading individual shareholder of Citigroup, surpassing the Saudi prince Alwaleed bin Talal, who bought a stake in the company in 1991 and currently has a capital of US$ 6 billion in Citibank.
Nevertheless, according to the France Presse agency, the purchase of Citigroup shares will not give ADIA the right to select members for the company’s board of managers, a right often granted to large shareholders, nor will it enable ADIA to take part in the administration of Citibank.
The Arab investment in Citibank will help the United States-based company compensate the US$ 6.8 billion in losses recorded in the third quarter of 2007, due to the United States mortgage crisis. The company is also expecting losses of up to US$ 11 billion in the fourth quarter of this year, according to news agency Reuters.
According to Market Watch, Citigroup shares have dropped by 42.5% in the last five months, resulting in a US$ 100 billion reduction in the company’s value this year. However, says the Website, ADIA’s decision of purchasing shares of Citigroup may also signal that the freefall in United States financial stocks is close to an end.
Gulf investors
Investors from the Gulf have already announced investments of US$ 70 billion in companies worldwide this year, says Market Watch. The amount represents more than the total investments in 2005 and 2006 combined. According to Bloomberg, one of those was ‘a large sum’ invested by Dubai International Capital, from the emirate of Dubai, in Sony, although figures were not disclosed.
In another deal, Mubadala Development Company, based in Abu Dhabi, bought US$ 622 million in shares of Advanced Micro Devices (AMD), which is the equivalent of 8.1% of the company’s capital. AMD manufactures computer processors. The information was supplied by AMD itself.
The Investment Corporation Dubai (ICD), an agency that controls large holdings owned by the Dubai government, informed that it also intends to benefit from the United States mortgage crisis and to shares of companies in the country’s financial sector, as informed by newspaper The Peninsula, from Qatar.
According to the newspaper, the shares of Merrill Lynch & Co, a United States bank that posted losses of US$ 8.4 billion in the third quarter as a consequence of the mortgage crisis, have plunged 42% since the beginning of June this year. However, the ICD informs that it is going to be careful about the time to close its acquisitions.
*Translated by Gabriel Pomerancblum
