Apollo-Led Investors Ink $5.5B Real Estate Deal With UAE State-Run Oil Company

A consortium led by Apollo Global Management Inc APO signed a partnership agreement with the Abu Dhabi National Oil Company (ADNOC), Reuters reported Tuesday.

What Happened: The real estate investment deal is valued at $5.5 billion and half of these proceeds would be paid upfront, according to Reuters. ADNOC anticipates that the transaction would be closed by the end of the year.

The Apollo-led consortium of institutional investors will acquire a 49% stake in ADNOC’s wholly-owned affiliate – Abu Dhabi Property Leasing Holding Company. The state-owned oil company agreed to the 24-year master lease agreement which would leverage rental income streams from select real estate assets.

Why Does It Matter: This deal provides ADNOC with an opportunity to create an alternate revenue channel that is distinct from its core Oil and Gas business, the company's CEO Sultan al-Jaber told Reuters.

By retaining a 51% ownership, the oil company wields control over real estate and social infrastructure assets.

Two months before entering into the real estate deal, ADNOC reportedly signed a leasing agreement for its Natural Gas Pipeline assets. The 20-year deal signed in June was finalized at $10 billion on a volume-based tariff.

Price Movement: Apollo Global stock rose 2.77% on Tuesday’s trading session to close at $48.17.

Photo courtesy: Andy_Bay via Wikimedia