Ipic gets $1.9bn ADCB loan

Sovereign fund Aabar, which bought Abu Dhabi Commercial Bank's 25 per cent stake in Malaysian group RHB Capital , will get a $1.9 billion loan from ADCB to pay for the deal, two sources familiar with the matter said.

Aabar parent International Petroleum Investment Co. obtained the loan from ADCB by using its deposits with the bank as collateral, the sources said, speaking on condition of anonymity.

"It is a three-way deal. ADCB is lending to Ipic and the funds will come back to the bank through Aabar," one of the sources said. The tenure and interest rate was not available.

Aabar agreed in June to pay 10.80 ringgit per share for ADCB's quarter stake in RHB in a $1.9 billion deal. The valuation offered by Aabar effectively stalled a consolidation in Malaysia's banking sector.

The deal was also seen as a means to shore up the capital base of the Abu Dhabi lender.

"ADCB declines to make any statement on loans extended to our customers, appropriate disclosure regarding all loans and advances can be found in our balance sheet in due course," it said.

Neither Aabar's chief executive not Ipic was available to comment.

The deal closed on Sept. 30 and the funds were transferred to an account in Malaysia in ringgits. ADCB booked a $357 million gain from the stake sale in its second-quarter results.

Aabar and Ipic would face higher financing costs if the deal was funded externally in the current environment, hence the decision to opt for a loan from ADCB, the source said.

Aabar had earlier rejected a financing proposal by an international consortium of banks as being too expensive, sources said in August.

Aabar, taken private by Ipic last year, missed an internal July 31 deadline to complete the deal and was liable to pay interest of 6.5 per cent per annum on the delayed payment.

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