United Arab Emirates' privately-owned KBBO Group plans to merge two of its investment firms and then raise more than $1 billion from listing a stake in the combined entity in either London or New York, two sources with knowledge of the matter said on Wednesday.

The family investment firm named after chairman Khalifa Butti Bin Omeir is merging two of its subsidiaries -- Centurion Investment and Infinite Investment LLC -- before the end of this year, with the aim of completing the 40 percent share sale in the second half of 2016.

Guggenheim KBBO Partners, a joint venture between New York-based investment firm Guggenheim Partners and KBBO, is advising on the process and banks will be chosen to arrange the initial public offering in early September, one of the sources said.

"The group is raising capital to fund new investment opportunities and to monetise existing investments," the source added.

Officials of KBBO declined to comment. Both sources declined to be named as the matter is not yet public.

Abu Dhabi-based firms like KBBO Group have been increasingly looking to outside markets for listings, given cumbersome local regulations and fragile investor confidence. The sole IPO since 2011 on the Abu Dhabi bourse, for leasing firm Massar Solutions, was scrapped before completing.

"The market and investors abroad have an appetite for good listings. The company holds attractive assets with a good track record and after the merger it will be a good equity story," the second source said.

KBBO's investments range from financial services to defence and it owns stakes in healthcare provider NMC Group, remittance and foreign exchange business UAE Exchange and UAE Defence Technology Co among others.

In March, KBBO said it plans to invest $2 billion in key sectors of Egypt, betting on growth prospects of that economy.

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