Adnoc signs $5.5 billion real estate deal with Apollo-led consortium


Adnoc signs $5.5 billion real estate deal with Apollo-led consortium

02 Sep 2020

Adnoc has entered into a $5.5 billion (Dh20.2 billion) real estate investment partnership with a consortium led by Apollo Global Management.

Under the deal, Adnoc will unlock significant value from its non-oil and gas infrastructure to reinvest into strategic growth projects. The transaction, which will result in upfront proceeds of $2.7 billion (Dh9.9 billion) to Adnoc, is expected to close by year-end.

Under the deal, the New York-based US private equity firm and its subsidiaries will receive rental income streams from select Adnoc real estate assets over a period of 24 years.

"Adnoc will maintain full ownership and control over its underlying real estate assets," according to a tweet from Abu Dhabi Media Office on Wednesday.

Adnoc will retain a 51 per cent majority stake, maintaining full ownership and control over the select real estate and social infrastructure assets, the company said in a statement on Wednesday.

Under the real estate transaction, which Adnoc said was one of the region's largest, Apollo led a consortium of institutional investors to acquire a 49 per cent stake in Abu Dhabi Property Leasing Holding Company, which is a wholly owned affiliate of Adnoc.

The company said the transaction has 'no financing' and was placed entirely with insurance and pension fund investors focusing on long-term and high-quality investments.

Minister of Industry and Advanced Technology and Adnoc Group CEO Dr Sultan Al Jaber said this strategic partnership allows Adnoc to unlock and monetize significant value from its non-oil and gas strategic infrastructure assets and reinvest into our core business to deliver further growth and realise greater returns.

"The innovative and flexible deal structure ensures Adnoc maintains full ownership and control over its real estate assets, while further strengthening our balance sheet and allowing for greater capital flexibility," Al Jaber said.

Leon Black, Apollo chairman, chief executive officer and founder, expressed his pleasure to invest in Adnoc's real estate portfolio and said the strategic move will be simultaneously supporting achievement of the company's strategic plans while presenting its investors with a highly attractive risk-reward opportunity.  

"Sourcing and structuring a long-term institutional investment of this nature is demonstrative of Apollo's unique ability to embrace complexity and tailor investments to a company's specific objectives. In a market where high-quality, long-dated yield is scarce, this transaction allows our institutional and insurance clients, including Athene, to participate in a proprietary investment alongside a world-class company like Adnoc," Black said.

In June, Adnoc signed an agreement worth $20.7 billion (Dh75.96 billion) with a consortium of the world's leading infrastructure and sovereign wealth funds to invest in Abu Dhabi's natural gas pipeline ininfrastructure. It is the largest deal in the energy sector this year so far.

Last year, Adnoc also signed a $5 (Dh18.35) billion oil pipelines deal with leading global private equity players such as BlackRock and KKR.

Source: Khaleej Times