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Aabar Signs Auto and Machines Deal with Algeria

ABU DHABI — Abu Dhabi-based Aabar Investments has signed a deal with the Algerian government to set up factories in that country to produce four-wheel-drive vehicles and engines, in a joint project with five German firms including MAN Ferrostaal AG and Aabar affiliate Daimler AG.

The project is Aabar’s fourth major investment deal in the last month alone, and it deepens the company’s already close relationship with Daimler. Aabar bought a 9.1 per cent stake in Daimler in March and is now the auto-maker’s largest shareholder.

As many as 10,000 cars and trucks will be assembled each year at the Algerian plants, with production expected to start in 2010, Aabar said in a regulatory filing to the Abu Dhabi Securities Exchange on Monday. The statement did not put a price tag to the deal.

German truck manufacturer MAN Ferrostaal will lead the project, which is part of Algeria’s effort to broaden its industrial base. Daimler, Deutz AG, MTU Aero Engines Holding AG and Rheinmetall AG will participate as technology partners providing licences and intellectual property, Aabar said.

Officials at the investment company declined to comment on the size of the deal when contacted by Khaleej Times.

However, Abu Dhabi-based financial newspaper Alrroya Aleqtissadiy reported last week that the agreement was to be worth about $720 million, citing Aabar Chairman Khadem Al Qubaisi. The agreement would establish three joint-stock firms, including one to produce Mercedes military vehicles, the paper said.

Al Qubaisi described the deal as “exciting,” in a company statement issued after the signing. “With this important investment, Aabar continues to develop opportunities through our partnership with Daimler,” he said.

The deal follows closely on Aabar’s July 28 agreement with Virgin Group to invest $280 million in Virgin Galactic. On July 20, Aabar formed a joint investment firm with Austria‘s Berndorf AG, agreeing to invest €150 million.

Aabar on July 14 acquired a 4 per cent stake in Tesla Motors Incorporated, a California-based maker of hybrid cars.

Aabar’s largest stakeholder, the International Petroleum Investment Company, or IPIC, owns 70 per cent of MAN Ferrostaal. IPIC is wholly owned by the Government of Abu Dhabi.

Algeria, the world’s eighth-largest oil exporter and fourth-largest gas exporter, has struggled to attract foreign investors due to a lingering Islamist insurgency and red tape.

· haseebhaider@khaleejtimes.com

· With inputs from agencies