Abu Dhabi prepares to become the largest cornerstone investor in Glencore as one of the emirate's sovereign wealth funds, Aabar Investments, takes a stake in the commodities trading group's highly anticipated flotation later this month. They and other investors are going to take 31% of the shares being sold.
Founded in 1974 by billionaire Marc Rich, the company - then called Marc Rich & Co - is now the world's largest commodities trader.
Abu Dhabi's Aabar Investments, part of the emirate's International Petroleum Investment Company,has stakes in carmaker Daimler and Italian bank UniCredit, said in a statement on Wednesday that it would invest $850m in Glencore, and possibly an additional $150m.
Glencore employs about 57,500 people across more than 40 countries, and had net income of $3.8bn on revenues of $145bn last year. It trades metals and minerals, as well as energy and agricultural products, and has benefited from the recent growth in demand for commodities, especially from China.
Abu Dhabi is following in the footsteps of Kuwait, which more than 20 years ago bought into British Petroleum and other US and European companies.
Glencore is constantly demonstrating that it likes to get to close to the production sources of the commodities in which trades (and to acquire substantial ownership interests). Abu Dhabi clearly offers opportunities to do so in energy. In return, Abu Dhabi could seek to tap Glencore’s huge knowledge of global markets.
A beautiful relationship I say!