(Bloomberg) – Apollo Global Management Inc. signed an agreement to invest $1.4 billion in Elder Properties PJSC, its latest commitment to Abu Dhabi following agreements in recent years that spanned the emirate’s state energy company and one of its wealth funds.
As part of the transaction, Apollo will take a direct minority stake in Elder Investment Properties, which could be one of the largest foreign direct investments in Abu Dhabi’s private sector, according to a statement on Monday. The deal is expected to close in the first quarter.
Elder, which primarily operates in Abu Dhabi, is pursuing growth in a tight market. At home, Emirates’ largest developer is expanding its management business. Beyond the United Arab Emirates, it has gained a foothold in Egypt through the acquisition of a majority stake in a developer called Sodik.
Weeks earlier, Alpha Dhabi Holding PJSC created an additional stake in Elder Properties worth approximately $1.5 billion. It is a unit of the Alpha Dhabi International Holding Company, which is headed by Sheikh Tahnoon bin Zayed Al Nahyan, brother of the de facto ruler of the United Arab Emirates and the country’s national security adviser.
The tie-up with Apollo comes less than two years after the New York-based firm led a consortium that agreed to invest $2.7 billion in the real estate of Abu Dhabi-based oil company Adnok. The alternative asset manager also has a strategic partnership with Abu Dhabi-based sovereign wealth fund Mubadala Investment Company.
With its best quarterly flow in more than a year, Apollo had $47.2 billion in cash available for investment at the end of 2021.
Eldar said last week that it plans to spend 5 billion dirhams ($1.36 billion) on acquisitions this year to grow its portfolio of revenue-generating assets. It reported a 21% increase in full-year profits, supported by “strong performance” across group businesses.
The company is benefiting from resurgent demand for property in Abu Dhabi, with plans to develop its revenue-generating unit, which includes schools and malls.
“We always knew this company had a huge land bank,” Yazan Abedin, chief executive and portfolio manager at AD Investment Management, said in a Bloomberg TV interview. “The most important part was knowing how to unlock and monetize the value of that huge land bank.”
Since its 2005 initial public offering, Aldar has produced several units. In addition to real estate development and sales, its new branches include income-generating properties such as schools, hotels, malls and offices, helping to provide a more predictable revenue stream.
Abdeen said Elder also has companies that provide services such as district cooling, subcontracting or cleaning for their communities.
Read more: Apollo Group invests $2.7 billion in assets of UAE oil firm
Structure of the Apollo deal:
- $500 million investment in Bhoomi joint venture
- $500 million goes toward permanent subordinated notes issued by Elder Investment Properties
- $300 million is a mandatory convertible preferred equity investment in Elder Investment Properties
- $100 million is a common equity investment in Elder Investment Properties
“Alder Investments may continue as a listed entity to unlock additional value for Elder shareholders in the future,” said Harshjit Ojha, Abu Dhabi-based International Securities LLC.
“There is a lot of interest for such properties, especially due to the paucity of listed real estate companies that manage operating properties with recurring income in the region,” Ojha said. “There will be a lot of demand from local, global and regional investors.”
– With the help of Manus Cranny.
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