Abu Dhabi fund bids $8.66 billion to take AD Ports private

The latest:

A cash offer of 6.25 dirhams a share, a 23% premium to the last close, would value Abu Dhabi Ports Co. at 31.8 billion dirhams and hand sovereign fund L’imad Holding full ownership. Bloomberg reported the shares jumped by their 15% daily limit to 5.86 dirhams on Monday. The company said delisting would remove funding constraints and short-term public-market return expectations.

Details:

• The structure: L’imad already owns more than 75% of AD Ports through its subsidiary ADQ, and is bidding for the shares it does not hold, according to Bloomberg. The fund is chaired by Crown Prince Sheikh Khaled bin Mohamed. The transaction remains subject to approvals, with no completion date announced.
• The rationale: The company said in its statement that leaving the market would let it pursue investments and acquisitions without the funding constraints or short-term return expectations of public markets. Bloomberg reported the deal would also likely give the government tighter control over a group spanning ports, maritime services and economic zones.
• Analyst pushback: The offer price sits below the targets of all but one of the eight analysts tracked by Bloomberg. EFG Hermes, one of the deal’s arrangers, carries the highest target at 8.50 dirhams. Tahir Abbas, head of research at Ubhar Capital, called the offer attractive but not “an overly generous premium” given long-term growth prospects.
• The trade-off: Abbas said investors who hold out face dilution risk, because management has indicated equity funding will be used for a substantial capital expenditure program including Fujairah. He framed the choice as the certainty of 6.25 dirhams today against retaining upside while accepting potential dilution.
• The numbers: AD Ports raised $1.1 billion in its 2022 listing and the stock has since risen close to 60%, per Bloomberg. Shares are up 6.9% this year, erasing early losses from the Iran war and outperforming Abu Dhabi’s benchmark index, which has gained less than 1%.
• Spending plans: The company forecasts capital expenditure of up to 5 billion dirhams across 2026 and 2027. More than 75% of planned spending through 2030 is earmarked for infrastructure assets, primarily ports and free zones, according to Bloomberg.
• Hormuz workarounds: Iranian attacks on vessels in the Strait of Hormuz since the war began have pushed Gulf states to seek routes for oil, gas, metals and chemicals. The UAE already partially bypasses the strait using an existing pipeline feeding east coast ports.
• The government line: UAE Minister of Foreign Trade Thani Al Zeyoudi said in a June interview the country is moving toward zero Hormuz dependency, naming a major expansion of Dibba, Fujairah and Khor Fakkan on the Gulf of Oman coast, plus at least one new harbor there. He did not give a timeline.
• Fund footprint: L’imad was created last year and absorbed ADQ, inheriting holdings from a stake in Sotheby’s to Abu Dhabi’s flagship airline. In May it joined BlackRock unit Global Infrastructure Partners, Temasek and ADNOC in a venture targeting $30 billion of infrastructure projects.
• The advisers: Rothschild & Co. is financial adviser on the tender offer. Emirates NBD Capital and First Abu Dhabi Bank are joint lead managers, and EFG Hermes UAE is co-lead manager, Bloomberg reported.

Background:

Abu Dhabi spent recent years listing strategic state assets in blockbuster IPOs to deepen capital markets and draw foreign investors, turning its exchange into one of the Gulf’s fastest-growing. AD Ports was among that wave in 2022.

Between the lines:

The AD Ports bid lands weeks after L’imad moved to delist the $81 billion utility TAQA, a pairing Bloomberg reads as running counter to the emirate’s earlier listing drive. Both targets sit in infrastructure, the same category absorbing more than 75% of AD Ports spending through 2030 and the focus of the fund’s $30 billion venture with BlackRock’s GIP, Temasek and ADNOC.

What’s next

Watch for regulatory approvals and the tender acceptance rate, given the offer undercuts seven of eight analyst targets. Also track progress on the Dibba, Fujairah and Khor Fakkan expansions and the promised new Gulf of Oman harbor.