Abu Dhabi's Aldar will pull in $1.4b from heavyweight US fund manager Apollo Global Management
Apollo already has struck alliances with Abu Dhabi blue-chips Mubadala and ADNOC
Dubai: One of the world’s biggest funds, US-based Apollo Global Management, is committing $1.4 billion into Abu Dhabi’s Aldar Properties’ backed ventures, signalling increased foreign investor interest in UAE possibilities.
As part of the deal, Apollo will take a minority stake in the Abu Dhabi entity’s investment arm - Aldar Investment Properties - at net asset value, highlighting the “underlying strength of its asset base and Apollo’s conviction in the company’s growth strategy, management capabilities, and ability to capitalize on accretive opportunities that lie ahead".
The transaction is expected to close by the end of next month, which will see Aldar receive "significant cash proceeds that are earmarked to drive our transformational growth agenda as we look to accelerate the effective deployment of capital across our robust pipeline of development and value investment opportunities".
Aldar Investment Properties is rated Baa1 by Moody’s, the highest credit rating for a non-government corporate in the region.
Apollo had in 2020 entered a strategic partnership with Mubadala Investment Company, and also has a long-term joint venture with ADNOC in which Apollo funds and clients led a $2.7 billion investment in a real estate joint venture.
“Diversifying our investor base and establishing partnerships is a key tenet of our growth strategy and essential in enabling us to build scale, enhance asset diversification, and drive earnings growth," said Jassem Busaibe, CEO at Aldar Investment. "We welcome Apollo as a long-term strategic investor and look forward to collaborating in order to grow our portfolio through additional value and yield accretive acquisitions. This transaction enables us to add further scale to our business and forms a critical milestone of our upcoming growth journey.”
Four-way split
Apollo will commit funds in four ways:
• A $500 million investment in a land joint venture;
• $500 million as ‘perpetual subordinated notes’ issued by Aldar Investment Properties;
• $300 million as a mandatory convertible preferred equity investment in Aldar Investment Properties; and
• $100 million in common equity investment in Aldar Investment Properties.
“This landmark transaction is a signal to the world’s investment community that Abu Dhabi’s real estate market is on a growth trajectory, supported by significant economic and social reforms, and a world leading response to COVID-19," said Talal Al Dhiyebi, Group CEO at Aldar Properties. "Aldar’s ability to attract a long-term partner such as Apollo underscores the strength of Aldar’s business franchise.”
It also allows Aldar and Apollo to execute diverse capital solutions as evidenced by Aldar’s first-ever issuance of perpetual subordinated notes and the largest hybrid private placement in the MENA region with the longest non-call period.