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Abu Dhabi To Merge Mubadala And ICPC Sovereign Wealth Funds

Mohammed bin Zayed al-Nahyan, the crown prince of Abu Dhabi, ordered the merger of state-owned investment firms Mubadala Development Company PJSC and International Petroleum Investment Co. (IPIC).

As reported on 29 June 2016, the merger would be overseen by a joint committee led by deputy prime minister Sheikh Mansour bin Zayed, and will include energy minister Suhail Mohamed Faraj al-Mazrouei.

"The merger of the two companies augments the investment advantages and economic revenue for Abu Dhabi, and creates a body capable of achieving the highest level of integration and growth in multiple sectors, including energy, technology and space industry," according to the state news agency.

Reuters believes the new entity would control an estimated US$135 billion in assets. The news agency mentioned that a “source close to the discussions” expects the merger to be completed by late 2017.

Both Mubadala and IPIC have significant and diversified foreign investments. Mubadala functions in a variety of industries including healthcare, technology, utilities, and aerospace. Mubadala Petroleum, meanwhile, has operations in the Mideast Gulf region, southeastern Asia, Kazakhstan, Tanzania and Libya, and is the largest foreign United Arab Emirates oil producer with 400,000 barrels per day.

Related: The One Chart That Shows Why Oil Prices Have To Keep Rising

IPIC is more concentrated in the energy sector and has several shares in upstream, midstream and downstream companies including Austria's OMV, Cepsa of Spain, the Sumed pipeline company in Egypt, and Canada's Nova Chemicals.

Argus Media detailed that Abu Dhabi's energy sector is in the middle of a major transformation, as the country's leadership works to streamline its diverse group of companies. State-owned oil company Adnoc recently overhauled its management, selecting Sultan al-Jaber as the new chief executive in February, and making appointments to several other executive posts throughout its subsidiary and operating companies in recent months.

The merger between Mubadala and IPIC could be the precursor to another consolidation involving a state-owned energy firm with foreign operations: Taqa. Abu Dhabi last October established a new international investment arm, Adnoc International, which could become the preferred entity for its overseas ambitions.

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By Erwin Cifuentes for Oilprice.com

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