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Private equity firm Carlyle Group is set to acquire a significant minority stake in Europe's largest privately-owned oil and gas company, Cepsa, from Abu Dhabi sovereign wealth fund Mubadala.
The Washington, D.C., based firm, one of the largest asset managers in the world with $216 billion in assets, plans to buy a 30-40% stake in Cepsa, or Compañía Española de Petróleos, S.A.U, which it values at $12 billion. That means the stake could be worth as much as $4.8 billion.
Mubadala will remain the majority shareholder, and the transaction's completion is expected by the end of 2019, subject to regulatory approvals.
The news follows a cancelled IPO (initial public offering) last year by Mubadala of a 25 percent stake in Cepsa, which was shelved amid last October's stock market rout.
"We found Cepsa very attractive to invest in," Marcel van Poecke, head of Carlyle International Energy Partners, told CNBC's "Street Signs" on Monday.
"In general, IPO markets in Europe — especially for industrial companies like Cepsa, but also other companies — were not good last year."
"We invest private capital over many years in companies, so we have a very outspoken idea about value and how we can create more value … We are not susceptible to day-to-day or month-to-month movements in market prices and I think that is important," van Poecke said.
The planned acquisition is the latest step in the UAE capital's drive to diversify revenue sources and bring private capital and more commercial management into its wealth fund.
Abu Dhabi has been accelerating its sales of stakes to international private investors in recent months. In February, Wall Street investment giants BlackRock Inc. and KKR agreed to invest $4 billion in Abu Dhabi's oil pipelines.
"We are thinking much more about growing the business — that is how to create our value and get to our returns," Carlyle Group's van Poecke said.
Musabbeh Al Kaabi, Mubadala's CEO for petroleum and petrochemicals, said in a statement that he was pleased to have Carlyle as a partner.
"This represents an important milestone in Cepsa's 90-year history. Mubadala has worked closely over the years with Cepsa's management team to build a world-class fully integrated energy company," Al Kaabi said. "We now look forward to working in partnership with Carlyle which has a significant track record and energy sector capabilities."
Cepsa operates in more than 20 countries and across the full petroleum value chain, including two refineries in Spain and a network of service stations along the Iberian Peninsula as part of its retail business. Its assets include significant oil reserves located offshore Abu Dhabi.
Abu Dhabi, home to 6% of the world's oil reserves, has leveraged Mubadala's $225 billion portfolio to invest in a range of sectors including energy, ICT, real estate, pharmaceuticals, agribusiness, mining, health care and more across five continents.