The Arab Petroleum Investments Corporation (APICORP), a multilateral development bank owned by the ten member states of the Organization of Arab Petroleum Exporting Countries (OAPEC), today said that in line with its five-year plan objective of diversifying its investment portfolio, it is in mature discussions to exit key investments and reinvest the proceeds in new oil and gas projects across the MENA region. The UAE government owns a 17 % stake in APICORP.
Ahmad Bin Hamad Al-Nuaimi, Chief Executive and General Manager of APICORP said, "Encouraged by the strong backing of our Board; the energy industry's pivotal role in economic revival and the high first-time issuer credit rating we received from Moody's, we feel it is an opportune time to initiate divestments and enter new ones that further diversify our oil and gas investment portfolio."
Al-Nuaimi revealed that APICORP is currently in advanced negotiations to divest two of its key equity stakes in oil and gas companies. "These two investments are extremely viable and it now makes sense that the assets go to owners seeking quality oil and gas investments that are relatively liquid while APICORP employs the sale proceeds to help develop new projects," he said.
The Bank is looking at reinvesting the proceeds of its divestments across MENA in projects in upstream and midstream sectors of the oil and gas value chain. Al Nuaimi said: "This initiative is consistent with the objectives of our five-year plan of 2010 – 2014 to broaden our investments into new oil and gas and utility sectors. The region's energy sector offers excellent opportunities estimated at around $470 billion[1] in investments and APICORP intends to capitalise on these to further economic development in the Arab world."
Saudi Arabia, where APICORP is headquartered, is a key target for further investments by the Multilateral Bank. "The many large oil and gas projects set to be implemented in Saudi Arabia over the coming years, estimated at $139 billion[2], provide exceptional equity opportunities for APICORP. Through such new investments, we seek to further consolidate our already considerably strong presence in the country," Al Nuaimi added. Saudi Arabia is one of the largest shareholders in APICORP with a 17 % stake. Approximately 65 % of APICORP's equity investments and 37% of its loan book are allocated to Saudi Arabia.
Since its founding, APICORP has played a vital role in fostering the development of the Arab energy industry. The Bank has invested in 14 joint ventures in the oil and gas industry. It has also participated in direct and syndicated energy transactions worth an estimated $123 billion and lent about $10 billion to member countries and other Arab countries. APICORP expects to double its direct investment portfolio by the end of its 2010-2014 five year plan from a value of $257 million at the end of 2006.
Last month, APICORP reported an above-budget net income of US$ 47 million for the first six months of 2010, a 95% rise over the same period last year, and for the 12 months ending 2009 APICORP reported an above-budget net income of US$ 59 million, a 111% rise over same period in 2008. "Our consistently strong results reflect the organization's sound financial fundamentals, the viability of our business model and our ability to withstand the impact of the credit crunch and the global economic recession," Al-Nuaimi pointed out.
"Over the last three decades, APICORP has weathered many regional crises and periods of low oil prices with self-sufficiency and without serious difficulty. We have enjoyed an excellent run so far and are well positioned to expand our business model," he concluded.
In June, APICORP obtained a strong backing for its credit profile when it received a first-time issuer rating of A1 from Moody's Investors Service for long-term debt and Prime-1 for short-term debt. APICORP's risk-weighted capital adequacy ratio was approximately 25 percent at the end of 2009. The ratio, which is already stronger than most A-rated commercial banks, is expected to rise to around 30 percent by 2014. APICORP's extremely low leverage ratio of 3.1% and non-performing loan (NPL) ratio of 0.7 % further contribute to its stability in a difficult global financial environment. As a multilateral development bank, APICORP enjoys a de facto preferred creditor status.
[1] APICORP Research - The Arab Energy Investment Outlook in a Changing Landscape
[2] APICORP Research - The Arab Energy Investment Outlook in a Changing Landscape
