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Depa, which has fitted out luxury homes, offices and yachts will issue new Class A shares to PIF. Image Credit: WAM

Dubai: The Saudi wealth fund PIF is investing Dh150 million in the Dubai fitout specialist Depa in one of its first deals of the year. To effect the transaction, Depa, which is a listed company, will issue the Public Investment Fund with 750 million newly issued Class A shares. The deal could, in all probability, will have PIF having a 62.5 per cent stake in Depa.

The transaction will include a restructuring of Depa’s Board of Directors, which will increase the number of directors from five to 11, with the six newly appointed directors to be nominated by PIF. Depa is listed on Nasdaq Dubai and has been associated with signature projects such as the Burj Khalifa.

PIF is among the world's Top 10 sovereign funds, with assets estimated at $500 billion. Of late, the fund had been investing more aggressively within Saudi Arabia as part of a reset after the pandemic broke in 2020.

The transaction has already picked up the requisite waivers and consents from DFSA (Dubai Financial Services Authority) on February 8, on the "condition that certain matters to be proposed at an extraordinary general meeting of Depa in connection with the transaction are duly approved".

The 'subscription shares' to be issued to PIF will not be listed initially on Nasdaq Dubai. An application could be made later to admit the subscription shares onto Nasdaq Dubai.

  1. The PIF-Depa transaction is conditional on a waiver from the Nasdaq Dubai and subject to Depa shareholders’ approval of certain resolutions requiring 75% or more of those present in person or by proxy in general assembly.
  2. A shareholder circular will be published in due course and the required meetings to approve the transaction will be convened as soon as possible.

A reset for Depa

For Depa, the deal could not have come at a more opportune time. The company had payments due from Arabtec, the construction giant that is in liquidation proceedings. The PIF transaction will provide Depa with the "support of a strategic partner in Saudi Arabia", which was identified during Depa’s strategic review completed in 2020 as a key growth market for Depa Interiors, Carrara, and Deco businesses.

Timely boost for Saudi plans

The increased liquidity resulting from the transaction will allow Depa to better execute its expansion plans, particularly in Saudi Arabia. The proceeds will also be used to recapitalise the business and provide additional working capital "with which Depa can more comfortably deliver both its existing projects and future projects".

In a statement, Abdullah Al Mazrui, the non-executive Chairman, said: “This transaction provides an exciting opportunity for Depa plc. The share issuance provides a much-needed boost to the group’s liquidity position, which will afford Depa with a platform for its expansion plans in the region, particularly in Saudi Arabia.

"In addition, Depa’s long-term strategic prospects are also enhanced by the proposed partnership with PIF in its key market going forward. The Board of Directors are delighted to unanimously recommend this transaction to the shareholders of Depa.”

Structuring the Depa-PIF deal
As part of the transaction, there will be a warrant instrument issued to Saudi Arabia's PIF, whereby certain payments relating to tax will allow PIF to exercise the instrument and receive up to 272,82 million additional Class A shares.

The warrant instrument may be exercised up to 18 months following the completion of the transaction. If the instrument is exercised in full, PIF’s shareholding and voting rights may increase up to approximately 62.5% of the enlarged share capital.