The Abu Dhabi National Oil Company (ADNOC) announced that Abu Dhabi Pension Fund (ADPF) and ADQ, one of the region’s largest holding companies, will invest $2.1 billion into select ADNOC gas pipeline infrastructure assets.
Under the terms of the agreement, ADNOC will divest 20% in ADNOC Gas Pipelines HoldCo LLC, a wholly owned ADNOC entity that holds 100% of ADNOC’s interest in ADNOC Gas Pipeline Assets LLC (ADNOC Gas Pipelines), to ADPF and ADQ. ADNOC Gas Pipelines is a subsidiary of ADNOC with lease rights to 38 gas pipelines covering a total of 982 kilometers. In July 2020, a consortium of global investors, comprising Global Infrastructure Partners, Brookfield Asset Management, Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan Board, NH Investment & Securities and Snam (the Consortium), invested $10.1 billion for a collective 49% stake in the same select ADNOC gas pipeline infrastructure assets.
ADNOC has sought to accommodate a combination of both international and domestic institutional investors in many of its investment opportunities, for example its pioneering oil pipeline investment agreement closed in September 2019. With the addition of these domestic investors, ADNOC can also tap new pools of long-term equity capital, while still maintaining operating and ownership control over the assets included as part of the investment agreement.
Commenting on the transaction, His Excellency Dr. Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC Group CEO, said: “We are delighted to once again partner with both Abu Dhabi Pension Fund and ADQ. Joining our global investor consortium partners in this landmark energy infrastructure investment, the addition of these high-caliber UAE investors sets a new benchmark for leading global and domestic institutional investors to deploy long-term equity capital into key ADNOC energy infrastructure assets.
“By partnering again with Abu Dhabi Pension Fund, the custodian and investor of the UAE’s citizens savings and long-term prosperity, ADNOC is playing a pivotal role in ensuring the financial wellbeing of the UAE community and its people. This follow-on investment will generate stable, long-term value and returns to both Abu Dhabi Pension Fund and ADQ’s stakeholders. Their engagement highlights and underlines the attractiveness and long-term value creation potential of our unique energy assets to the global investment community, further reinforcing ADNOC’s role as a primary driver in attracting tier one global institutional capital into Abu Dhabi and the UAE.”
ADPF and ADQ join the other leading global institutional investors to gain access to a unique opportunity to invest in high-quality energy infrastructure assets with an attractive risk profile that generate stable cash flows, showcasing the continued strong demand from the global and domestic investment community in ADNOC’s unique and premium asset base. For ADPF this marks the second investment partnership into ADNOC’s infrastructure assets, following its $300 million investment into select ADNOC oil pipelines, announced in April 2019. In July 2020, ADNOC and ADQ signed a joint venture agreement to create a new investment platform to fund and oversee the development of industrial projects within the planned Ruwais Derivatives Park.
His Excellency Khalaf Abdullah Rahma Al Hammadi, Director General of Abu Dhabi Pension Fund said: “The Fund is keen to implement the directives of the UAE’s wise leadership and achieve the Abu Dhabi government's vision aimed at building strong partnerships between major national institutions to support the national economy and achieve the highest possible benefits.
“This agreement comes after the successful investment cooperation between the Fund and ADNOC in the oil pipeline infrastructure space, which concluded last year and marked a major shift in the quality of the Fund’s investments. The Fund is looking to strengthen its strategic partnership with ADNOC to further diversify its investment portfolio and achieve long-term returns for its stakeholders.”
His Excellency Mohamed Hassan Alsuwaidi, CEO of ADQ, commented: “ADQ is investing in a group of midstream infrastructure assets, which are at the heart of Abu Dhabi’s goal of achieving gas self-sufficiency and becoming a gas net exporter. Our strategic investment in ADNOC’s gas infrastructure provides us with the opportunity for stable, predictable cash flows. Aligned with our mandate to create value for Abu Dhabi, we are further strengthening our relationship with ADNOC and its world-class infrastructure in the Emirate.”
Since announcing the expansion of its partnership and investment model and the more proactive value management of its assets and capital in 2017, ADNOC has entered the debt capital markets for the first time, issuing a $3 billion bond backed by the Abu Dhabi Crude Oil Pipeline; partially floated ADNOC Distribution, the first-ever IPO of an ADNOC Group company; and entered into several strategic investment partnerships in its drilling, refining, fertilizer and trading businesses, amongst others. ADNOC also recently closed innovative investment partnerships with leading global institutional investors and operators in both its oil and gas pipelines and non-oil and gas strategic infrastructure.
The transaction is expected to close later this month, subject to customary closing conditions and all regulatory approvals.
Bank of America Securities, First Abu Dhabi Bank and Mizuho Securities acted as financial advisors to ADNOC while Moelis & Company acted as an independent financial advisor to ADNOC.