Liabilities of the International Petroleum Investment Company (Ipic) rose more than 38 per cent to US$44 billion (Dh161.6bn) at the end of June compared with a year earlier as it took on huge amounts of debt, its financial statements show.
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Total borrowing by the Abu Dhabi Government-owned energy holding company, and companies Ipic controls, increased by more than $10bn to $31.8bn after it raised money in international debt markets for the first time last year and conducted another round of debt-raising this year.
Ipic paid $722.6 million in financing costs in the first half, including interest and fees, up from $402m in the same period last year.
The company's holdings include Borealis, a European plastics giant based in Austria, Nova Chemicals, a Canadian plastics and chemicals company, and Aabar Investments, a diversified investment vehicle based in Abu Dhabi.
Ipic issued a $2.5bn bond last November and tapped markets for an additional $4.4bn in March, accounting for the lion's share of the increase in borrowing. Ipic's debt has spiked as it begins to operate increasingly on a commercial basis after years of funding its businesses with injections from the Abu Dhabi Government.
Ipic is meeting with investors in Europe and the US in preparation for another possible bond sale. The financial statements, posted to the London Stock Exchange as part of Ipic's public debt sales, also revealed a threefold rise in profit to $988m for the first half of the year compared with the same period of last year.
A continuing dispute over Ipic's purchase in 2009 of 70 per cent of Ferrostaal, a German industrial services giant, also remained a thorn in its side during the first half of the year, the financial statements say.
Soon after Ipic bought the company from the lorry maker MAN, German investigators began a bribery investigation into Ferrostaal. Ipic tried to back out of the transaction last year, and has since been in arbitration with MAN.
Ipic set aside $168.6m as a provision for "legal disputes" by the end of June, including its tussle with MAN, saying in the statements that the outcome of German investigations was "highly uncertain".
Ipic "is also actively seeking a settlement with the other shareholder of Ferrostaal [MAN] and seller of the 70 per cent stake in respect of the arbitration filed by the company," Ipic's statements to the London Stock Exchange said. "However, the company remains prepared to enforce its legal rights through arbitration if an acceptable settlement cannot be reached."
The documents also shed new light on the activities of Aabar during the first half of the year.
Aabar, which owns stakes in Germany's Daimler and Virgin Galactic, a commercial space-flight venture that is part of the British entrepreneur Richard Branson's Virgin Group, was publicly listed in Abu Dhabi before being taken private by Ipic last year.
Aabar, the documents reveal, agreed to pay Dh1bn in June for land and buildings in the Shams development on Reem Island, one of the biggest projects under development in Abu Dhabi. The company paid Dh500m in July and is expected to complete the deal by the end of the year.
In the same month, Aabar agreed to pay $400m for "an aircraft", the statements say, without providing further details. A $100m deposit had been paid as of the end of June, they said.
Another major investment followed in July, when Aabar put $110m of additional funds into Virgin Galactic. Aabar had bought 32 per cent of Galactic in 2009 for $280m and promised to "potentially commit" a further $110m to fund a "small satellite launch facility".
The new money would be used "to develop orbital launches of small satellites", the statements say. "This is the second phase after Aabar's initial investment of $280m in the company which will provide sub-orbital space flights to the public."
Ipic did not respond to a request for comment.
