German carmaker Daimler said Monday that the sale of a 9.1% stake to an Abu Dhabi investment fund gives it an advantage over rivals that have yet to seek additional cash as automotive markets shrink.
Daimler raised $2.66 billion selling new shares to Aabar Investments. The money will be used to finance fuel-saving technology such as development of battery-powered vehicles, Chief Executive Dieter Zetsche said.
The investment buttresses Daimler's resources as the worst auto-industry crisis in decades forces the maker of Mercedes-Benz cars and trucks to cut hours for 54,000 German assembly-line workers and close two plants in North America.
Carmakers need capital as deliveries fall, and Daimler has an advantage over competitors in winning Aabar as a shareholder, Zetsche said.
"We are not surprised by the capital increase and indeed expect similar moves by auto manufacturers across Europe," said Adam Jonas, a London-based Morgan Stanley & Co. analyst.
Car sales in Europe, Daimler's biggest market, fell 18% in February, extending a 10-month contraction.
Aabar overtakes the government of Kuwait, which owns 6.9%, as Stuttgart-based Daimler's largest shareholder. The fund, which has stock traded on the Abu Dhabi market, is being acquired by Abu Dhabi's government-owned International Petroleum Investment Co., or IPIC, which will own 71% of the fund.
The fund sought out Daimler because it wanted to use the carmaker's expertise as Abu Dhabi's government focused on developing cleaner energy technologies, said Khadem al-Qubaisi, head of both Aabar and IPIC.
Daimler will set up an automotive-industry training center in the Persian Gulf emirate.
Aabar isn't interested in setting up factories in Abu Dhabi or in overseeing overall strategy at the carmaker, al-Qubaisi said. The fund is satisfied with a 9.1% holding, while remaining open to further investments, he added.
Aabar acts as IPIC'S vehicle for investments outside the oil industry.