(Bloomberg) — The Abu Dhabi wealth fund L’imad Holding is looking to buy out minority shareholders in the city's port operator, valuing the company at 31.8 billion dirhams ($8.66 billion). This move could support the emirate's plans to expand its infrastructure, potentially reducing reliance on the Strait of Hormuz.
L’imad intends to offer a cash price of 6.25 dirhams per share for the portions of Abu Dhabi Ports Co. it does not already own. This price represents a 23% premium compared to the stock’s last closing price. Following the announcement, the shares surged by the daily limit of 15% to 5.86 dirhams on Monday. The wealth fund, chaired by Crown Prince Sheikh Khaled bin Mohamed, already holds over 75% of the company through its subsidiary ADQ.
This transaction, pending approvals, will enable the company to engage in investments and acquisitions without the limitations or immediate return expectations associated with public markets.
The deal is likely to give the government more control over a crucial logistics and infrastructure entity that includes ports, maritime services, and economic zones. It would also allow the sovereign investor to make longer-term strategic decisions, especially as the ongoing conflict in Iran disrupts traffic through the important Strait of Hormuz.
L’imad, which was established last year, quickly integrated ADQ, a major sovereign investor with a diverse range of assets including a stake in Sotheby’s and Abu Dhabi’s leading airline. This merger expanded its mandate, positioning it at the forefront of Abu Dhabi's efforts to strengthen defense and infrastructure investments amid regional tensions.
The deal with AD Ports highlights L’imad's increasing significance and follows its recent announcement to de-list the $81 billion utility known as TAQA. These transactions oppose the strategy that officials have pursued in recent years, which aimed to transform the emirate's stock market into one of the fastest-growing exchanges in the Gulf through significant initial public offerings (IPOs). Key assets that were previously held by the government were listed to enhance capital markets and attract foreign investments.
AD Ports was among several new share offerings during that period, raising $1.1 billion in 2022, and its stock has since increased by nearly 60%. This year, the shares have gained 6.9%, recovering from sharp losses in the early weeks of the Iran conflict and outperforming Abu Dhabi’s benchmark equity index, which has seen less than 1% growth this year.
However, the offer price is below the targets set by most of the eight analysts followed by Bloomberg, with EFG Hermes, one of the deal's arrangers, providing the highest target of 8.50 dirhams per share.
Tahir Abbas, head of research at Ubhar Capital, noted that while the offer is attractive, it does not provide an “overly generous premium” considering AD Ports' long-term growth potential.
“For investors who are holding out, there is a risk of dilution, especially since management has indicated that equity funding will be utilized for significant capital expenditures, including in Fujairah,” he explained. “The main trade-off is the certainty of receiving 6.25 dirhams now versus the potential for future gains, which may come with dilution risks.”