Adnoc inks US$5.5b deal with Apollo-led consortium

Dubai

ABU Dhabi National Oil Company (Adnoc) said on Wednesday that it has entered into a US$5.5 billion real estate investment partnership with a consortium led by Apollo Global Management.

The state-owned oil company of Abu Dhabi in the United Arab Emirates (UAE) said in a statement that the transaction will result in upfront proceeds of US$2.7 billion and is expected to close before the end of 2020. "The strategic investment will leverage the rental income streams from select Adnoc real-estate assets under a 24-year master lease agreement," it added.

Under the real estate transaction, which Adnoc said was one of the region's largest, private-equity firm Apollo led a consortium of institutional investors to acquire a 49 per cent stake in Abu Dhabi Property Leasing Holding Company, a wholly-owned Adnoc affiliate. Adnoc will retain a 51 per cent majority stake, maintaining full ownership and control over the select real estate and social infrastructure assets, it added.

"This strategic partnership allows Adnoc to unlock and monetise 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," Adnoc's chief executive officer Sultan al-Jaber said.

The deal comes as the world's top oil and gas companies, including Adnoc, try to control costs in response to the Covid-19 pandemic, which has reduced oil demand and prices.

In June, Adnoc signed a US$10 billion deal to lease its natural gas pipeline assets to a group of investors, under a newly formed subsidiary Adnoc Gas Pipelines for 20 years, in return for a volume-based tariff.

Four years ago, Adnoc started a transformation strategy to adapt more quickly to market changes. The company has said it would continue to work with investors to attract foreign capital and maximise value from its resources. REUTERS