ADNOC signs a $5.5 billion ownership agreement with the Apollo Global Management consortium
Abu Dhabi's state oil company, ADNOC, has signed an agreement to invest up to $5.5 billion in the real estate market with Apollo Global Management, according to the digital version of the Emirate newspaper 'Arab News'. ADNOC estimates that this operation will bring in an initial revenue of 2.7 billion dollars and is expected to close before year-end. “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% stake in Abu Dhabi Property Leasing Holding Company, a wholly owned ADNOC affiliate.
ADNOC will retain a 51% 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.
If there has been one industry hit by the pandemic, it has been the oil industry. The paralysis of the world economy during the lockdown sank the demand for black gold and its prices. In addition, the lack of agreement between OPEC partners prevented the cutback in production when oil was being stopped. The lack of demand and the excess supply led to a brutal collapse in the price of the barrel. Although the barrel has now regained positions and is traded at around 45 dollars, the oil companies have been forced to readjust their budgets and plans for this crazy 2020. ADNOC's agreement is in this context and aims to diversify the companies' revenues.
In June, ADNOC signed a $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, and the company has said it would continue to work with investors to attract foreign capital and maximise value from its resources.