An arm of Qatar's sovereign wealth fund agreed Monday to buy more than 6 percent of Spanish power utility Iberdrola SA for just over 2 billion euros, strengthening the gas-rich Gulf nation's financial ties to Europe.
As part of the deal, Qatar Holding and Iberdrola said they will work together to develop new electricity-related business projects, mainly in fast growing and emerging markets.
Qatar Holding will pay euro2.02 billion ($2.82 billion) for the stake, which will mostly come from nearly issued shares. It said the deal is part of its strategy of building a diverse portfolio of global businesses.
"In addition to a strong, stable European franchise, our investment in Iberdrola provides significant exposure to other important global markets including Brazil, Mexico and the United States of America," Qatar Holding managing director and CEO Ahmad Mohamed al-Sayed said in a statement.
Iberdrola is boosting its share capital by 6.17 percent as part of the deal. The new shares are valued at euro5.63 apiece _ below the euro5.96 its stock fetched on the open market at the close of business last week. It is also selling Qatar Holding euro115 million worth of shares it already had on hand.
Once the deal is complete, Qatar will own a total of 6.16 percent of Iberdrola.
Iberdrola is Spain's largest utility by market value and the world's biggest wind-power generator. Monday's deal calls for it to set up a regional headquarters and research and development operations in Qatar.
Iberdrola said it will use Qatar's cash injection to shore up its finances and pursue deals of its own. It has announced plans to take over Brazilian electricity company Elektro Eletricidade e Servicos SA for 1.7 billion euros, though the acquisition hasn't yet been completed.
Qatar Holding is the main investment arm of the OPEC member's Qatar Investment Authority sovereign wealth fund.
It has acquired stakes in a number of European companies in recent years as the small peninsular nation rapidly boosted its ability to export liquefied natural gas around the world.
Qatar Holding last year agreed to pay up to $2.7 billion for a 5 percent stake in the Brazilian arm of Spain's Banco Santander SA.
It also holds big stakes in British bank Barclays PLC and Switzerland's Credit Suisse Group. Other major investments include stakes in automaker Volkswagen AG, British retailer J Sainsbury PLC and the London Stock Exchange.
In February, Spanish football club Barcelona agreed to drop UNICEF from the front of its jersey and replace it with a new sponsor, the government-run Qatar Foundation. Qatar, the World Cup host in 2022, is paying Barcelona euro30 million ($40 million) per season for the privilege.