Aldar Properties PJSC (“Aldar”) and Apollo Global Management (“Apollo”) (NYSE: APO), one of the world’s largest alternative investment managers, have signed a landmark commitment that will see Apollo-managed funds and clients invest a total of US$1.4 billion in strategic capital to drive Aldar’s transformational growth initiatives.
The commitments are structured in the following components:
- US$500 million: Investment into a land joint venture
- US$500 million: Perpetual Subordinated Notes issued by Aldar Investment Properties
- US$300 million: Mandatory Convertible Preferred Equity investment in Aldar Investment Properties
- US$100 million: Common Equity investment in Aldar Investment Properties
The US$500 million land joint venture will allow Aldar to realise long-term value tied up in its vast landbank, whilst maintaining flexibility to develop or sell the land as per Aldar's long-term development strategy.
As part of the deal, Apollo will take a direct minority stake in Aldar Investment Properties at its 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. Aldar Investment Properties is rated Baa1 by Moody’s, the highest credit rating for a non-government corporate in the region.
This investment, for both Aldar Investment Properties and Aldar Group demonstrates the company’s ability to attract institutional capital into its real estate platforms. It also showcases an ability for Aldar and Apollo to execute innovative, 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.
Commenting on the transaction, Talal Al Dhiyebi, Group Chief Executive Officer at Aldar Properties, said: “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. Aldar’s ability to attract a long-term partner such as Apollo, underscores the strength of Aldar’s business franchise as well as the quality and investment appeal of the Abu Dhabi real estate market, both of which are driven by robust fundamentals underpinning long-term economic growth.”
The transaction follows the successful social and economic reforms that have been implemented by the Abu Dhabi Government that have enhanced the Emirate’s appeal and attractiveness as a go-to and leading investment destination for institutional and international investors such as Apollo. The strategic and long-term outlook of Apollo’s investment endorses both the fundamentals of the Abu Dhabi real estate market and Aldar as a platform for excellence and continued growth. The long-term deal, which will see Apollo and Aldar look at further opportunities in the future, will enable Aldar to accelerate and press forward with its transformational growth agenda.
As a result of the transaction, which is expected to close by the end of Q1 2022, Aldar will 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.
Jassem Busaibe, Chief Executive Officer at Aldar Investment, added: “Diversifying our investor base and establishing partnerships is a key tenet of our growth strategy and is essential in enabling us to build scale, enhance asset diversification, and drive earnings growth. We wholeheartedly 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.”
Apollo Chief Executive Officer Marc Rowan said, “Apollo is pleased to serve as a long-term capital partner to Aldar and to continue expanding our strategic investments and partnerships in Abu Dhabi, and across the United Arab Emirates. Leveraging our global integrated investment platform and permanent capital base, we were able to structure a capital solution to support Aldar’s transformational growth agenda while allowing our investors to access highly attractive, long-dated yield.”
The Aldar investment marks Apollo’s latest commitment to Abu Dhabi and the UAE. It follows on a 2020 strategic partnership with Mubadala Investment Company, as well as a long-term joint venture with ADNOC in which Apollo funds and clients led a $2.7 billion investment in a real estate JV.