UAE's ADNOC inks $5.5 billion real estate deal amid monetization of units

Dubai — Abu Dhabi National Oil Co., the UAE's biggest energy producer, has inked a $5.5 billion deal for its real estate assets with a consortium of investors led by Apollo Global Management, its third such transaction since 2019, as it continues to monetize units to fund other key projects.

The Apollo-led consortium will acquire a 49% stake in ADNOC unit, Abu Dhabi Property Leasing Holding Co, with ADNOC retaining a 51% stake in ADPLHC, which will hold long-term leasehold interests underpinned by a portfolio of assets in oil-rich Abu Dhabi, ADNOC said in a statement Sept. 2.

"The investment will unlock new pools of global institutional long-term capital for ADNOC, while supporting investment in its core business and strategic growth projects," it said in the statement. "The transaction will result in upfront proceeds of $2.7 billion to ADNOC and is expected to close before year-end, subject to customary closing conditions and regulatory approvals."

Since 2019, ADNOC has been monetizing its oil and gas assets as it seeks to unlock cash to fund strategic projects, which include increasing oil output capacity to 5 million b/d by 2030, from around 4 million b/d currently.

"The innovative and flexible deal structure ensures ADNOC maintains full ownership and control over its real estate assets, while further strengthening our balance sheet and allowing for greater capital flexibility," said Sultan al-Jaber, UAE Minister of Industry and Advanced Technology, and ADNOC Group CEO.

Gas pipeline deal

In June, ADNOC inked a deal worth more than $10 billion with a group of investors to sell a 49% stake in its gas pipelines a year after striking a similar transaction for its oil pipelines.

A consortium grouping Global Infrastructure Partners, or GIP, Brookfield Asset Management, Singapore's sovereign wealth fund GIC, Ontario Teachers' Pension Plan Board, South Korea's NH Investment & Securities and Italy's Snam will invest in select ADNOC gas pipeline assets valued at $20.7 billion, ADNOC said in a statement on June 23. ADNOC will get upfront proceeds of more than $10 billion from the transaction, subject to regulatory approvals.

The consortium will collectively hold a 49% stake in ADNOC Gas Pipelines, a newly-formed ADNOC unit, with the parent company holding the remaining interest.

Oil pipeline transaction

ADNOC last year clinched a $5 billion deal with a consortium that includes GIC, BlackRock Inc., KKR & Co and Abu Dhabi Retirement Pensions and Benefits Fund, to sell them select pipeline infrastructure and collectively hold a 49% stake in ADNOC Oil Pipelines, a subsidiary of the parent company.

ADNOC Oil Pipelines will lease the national oil company's interest in 18 pipelines and give rights to transport crude and condensates from the company's onshore and offshore concessions over 23 years.

The transaction was the first midstream partnership between institutional investors and a Middle East national oil company.