Abu Dhabi National Oil Company (ADNOC) has signed a $5.5 billion deal with Apollo Global Management to lease some of its properties on a long term basis.
The deal is a part of the ADNOC’s efforts to extract money from its non-core assets.
The New York-based Apollo Global Management and its subsidiaries will receive rental income streams from select ADNOC properties for a 24 years period.
This investment will support the UAE’s state owned energy giant in its core business and strategic growth plans.
The Apollo-led consortium of institutional investors has acquired a 49 percent stake in Abu Dhabi Property Leasing Holding Company RSC Limited (ADPLHC), wholly-owned affiliate by ADNOC.
While ADNOC will retain full ownership and control over the selected social infrastructure and real estate assets. It will also be responsible for all maintenance and operations.
“This strategic partnership allows ADNOC to unlock and monetize significant value from its non-oil and gas strategic infrastructure assets and reinvest into our core business to deliver further growth and realize greater returns.”
For Apollo, it is hoped that high-quality leased assets will gain access to better, risk-adjusted return profiles and that the world’s leading and most creditworthy companies will achieve strong employment and rental rates with a portfolio of assets.
ADNOC will, in one of the largest transactions in the real estate industry of UAE, receive $2.7 billion in advance revenue and which will close the deal before the end of the year, the company said in a statement.
With this deal, Apollo joins a long list of global institutional investors who have engaged in ADNOC’s efforts to unlock new capital streams.
Earlier this year, ADNOC had successfully drawn a group of investors into its midstream business. A group of the world’s leading infrastructure and sovereign wealth funds signed a $20.7 billion agreement in June to invest in the natural gas pipeline system at Abu Dhabi. The infrastructure deal is so far this year’s largest in the energy sector.
A $5 billion deal involving the ADNOC oil pipelines in 2019 had attracted leading global private equity players including BlackRock and KKR.