With global stock markets at record lows and coffers overflowing with oil money, Middle Eastern countries are increasingly looking at diverse investments. The latest  to attract investment from the region is Mercedes-Benz maker Daimler AG.

Yesterday, Daimler said that it would sell about €1.95 billion worth of new shares of stock to Abu Dhabi, making the emirate its largest shareholder at a time of extreme hardship for the global auto industry.

Daimler and Aabar Investments PJSC, the Abu Dhabi government's fund, said in a statement Sunday that the planned $2.7 billion injection of cash "further strengthens Daimler's sound capital base and offers additional flexibility to invest in new automotive technologies." The two parties agreed to cooperate on several projects. These will include development of electric vehicles, production of new materials for automotive manufacturing, and social projects such as the development of training centres in Abu Dhabi.

Under the deal, which has already been approved by the Daimler board, the German company said it would increase its share capital by 10 per cent, with 9.1 per cent of the new equity going to Aabar. Another Middle Easter economy, Kuwait, had been the largest shareholder, with 6.9 per cent. Existing Daimler shareholders are excluded from the offering.

"Daimler is an iconic brand and a financially strong company with a reputation for excellence worldwide. We are delighted to have the opportunity to make this investment and are excited by the commercial potential of our partnership," said Aabar chairman Khadem Al Qubaisi.

Daimler is issuing the stock that Abu Dhabi is buying at a price of €20.27 a unit, a small discount to the closing price of Daimler's stock on Friday in Frankfurt, which was €21.34. Daimler shares have lost more than 20 per cent of their value this year. However, today the shares climbed as much as 8 per cent in early trading before giving up some of their gains to stand lately about 2 per cent higher. Other European auto stocks were mostly higher.

Aabar, which is based in Abu Dhabi, is listed on the Abu Dhabi Securities Exchange. It is controlled by the International Petroleum Investment Co. (IPIC), which in turn is owned by the Abu Dhabi government. It differs from many of the oil-rich Persian Gulf's sovereign wealth funds in that some of its shares are publicly traded.

However, with IPIC increasing its stake today with a $1.41 billion cash injection, the Abu Dhabi government will have a clear controlling interest. Today's announcement follows a similar investment worth about $408 million by IPIC last month. Once the latest stock conversion is complete, IPIC will own 71 per cent of Aabar, up from about 36 per cent now.

In December, Aabar agreed to buy American International Group Inc.'s Swiss-based wealth management arm AIG Private Bank Ltd. According to its annual report, Aabar paid 307 million Swiss francs ($273 million) for the bank and assumed about 100 million Swiss francs worth of debt.

Sheik Mansour Bin Zayed Al Nahyan, a prominent member of Abu Dhabi's ruling family, which controls the United Arab Emirates presidency, chairs IPIC. He led the takeover of English football team Manchester City and joined Qatari investors in pumping billions of dollars into British bank Barclays PLC last year.