INVESTORS AND the German government hailed Daimler’s move to lure Abu Dhabi-based Aabar Investments as an anchor investor, in a deal that could act as a blueprint for other carmakers.
Daimler’s share price jumped by up to 7 per cent after it emerged on Sunday that Aabar had invested €1.95bn for a 9.1 per cent stake in the German premium carmaker.
Investors cheered even as Daimler’s 10 per cent capital increase diluted existing shareholdings.
Dieter Zetsche, chief executive of Daimler, said the carmaker had taken the “advantage of the first mover, as several other companies will try to boost their equity base as well”.
Carmakers around the world are reeling from a steep drop in demand, resulting in a huge cash drain for the industry.
Daimler has had a cash outflow of €3.9bn in the past year, when it built up a large backlog of unsold cars. The cash burn is expected to continue throughout this year.
“We appreciate the strengthening of the net cash position to €5bn and believe this will facilitate access to credit,” said Daniel Schwarz at Commerzbank. Daimler has to refinance around €10bn this year, more than any other German company. “Auto companies globally are running low on equity. Daimler’s move to issue new shares is unlikely to be the last in the sector,” said Adam Jonas at Morgan Stanley.
However, some of the other carmakers are fighting even steeper losses, burdened with large debt piles and might find it more difficult to woo investors.
Khadem Al-Qubaisi, Aabar’s chairman, said the group had no interest in other car companies. Aabar had chosen Daimler because of its high-quality cars and good management, he said.
The German government, which had long been wary of foreign state investors, welcomed Aabar’s investment as a “positive signal”. Mr Zetsche said Daimler would co-operate with its largest shareholder in the transformation from the traditional combustion engine to production of “clean cars” such as electric and hydrogen powered vehicles.
Daimler has already put billions into the development of alternative engines, but the rapid downturn is stripping carmakers of the cash needed for further investments.
Mr Zetsche said Aabar could support the carmaker by running field projects in Abu Dhabi and by contributing to further investments.
Mr Al-Qubaisi told the Financial Times on Sunday that the investment company was interested in lifting its stake in Daimler to up to 20 per cent. “We are considering to do that – not now but in the next years, depending on the development of the markets and our strategy,” he said.
– Financial Times Service