Abu Dhabi's Mubadala Said To Mull Options For $10bn Nova

Abu Dhabi’s Mubadala Investment Co is exploring options for Nova Chemicals Corp, a Canadian plastics maker that could be valued at $10 billion or more, according to people with knowledge of the situation.

The sovereign wealth fund is working with financial advisers as it weighs what to do with the asset, including selling a stake to a Canadian pension fund or another company in the industry, said the people, who asked not to be identified as the matter is private.

No final decisions have been made, and Mubadala may still decide to keep its holding in Nova, they said.

Abu Dhabi, like many of the governments in the Middle East, is seeking funds to diversify its economy away from oil, though opinions within the emirate have differed on which strategy to pursue, two of the people said.

The emirate acquired debt-laden Nova in 2009, and the asset soon became one of its top investments after the Calgary-based company took advantage of the boom in North American shale.

A spokesman for Mubadala declined to comment.

While large oil producers have shifted in and out of chemical manufacturing over the years, the current trend is to create huge integrated players. Concerns about the rise of electric vehicles and green energy are spurring the move back into chemicals to take advantage of ongoing growth in demand for oil-and-gas derived plastics.

Abu Dhabi National Oil Co, the emirate’s state-owned oil company, has been looking at ways to add petrochemical operations. The company this month signed an agreement with Austria’s OMV to cooperate on projects that combine the firms’ chemical and refinery expertise.

Adnoc and Mubadala are also discussing more ways to work together, the wealth fund’s deputy chief executive officer said this month. Adnoc and Mubadala-owned plastics maker Borealis are partners in Borouge. The joint venture was first established in 1998 and has been ramping up output ever since.

In contrast to China and Saudi Arabia, Abu Dhabi has so far stalled on consolidating its petrochemical and plastics assets. China is in the midst of merging Sinochem Group with China National Chemical Corp. In a similar vein, Saudi Arabian Oil Co this week agreed to acquire a majority stake in fellow state-owned chemical maker Saudi Basic Industries Corp.