Exclusive: ADFG eyes private equity deals in Latin America, to launch debt fund in 2018

Investment firm eyes IPO of Etihad Reit in 3-6 months

"We have aggressive growth plans over the next five years and [we] are looking at growing organically and inorganically,” said Mr Kheriba, COO of Abu Dhabi Financial Group, Victor Besa / The National

Abu Dhabi Financial Group, the investment firm with around $6 billion in assets under management, plans to launch a new fund this year and is eyeing private equity acquisitions in Latin America as it continues to diversify its investments, its chief operating officer said.

ADFG is targeting a launch in the next 3-6 months for a $150 million mezzanine debt fund and the initial public offering of Etihad Reit, said Mustafa Kheriba. The company has received “a good portion of soft commitments” from GCC and Mena investors for the mezzanine fund. The Etihad Reit, which will focus on various types of property across the seven emirates, is likely to be listed on the Abu Dhabi Securities Exchange, but ADFG has yet to decide on a listing venue.

"We have aggressive growth plans over the next five years and are looking at growing organically and inorganically,” said Mr Kheriba.

ADFG, a majority shareholder in Dubai investment bank Shuaa Capital that also has stakes in Bahraini investment bank GFH Financial Group and Sharjah-based energy group Dana Gas, has been investing heavily in public listed companies in the last few years. It devised a turnaround strategy for Shuaa , which recorded in 2017 its strongest full-year net profit since 2007.

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The company has four business lines: public equity, private equity, real estate and debt financing.

With regards to private equity, the firm is interested in new markets besides the GCC and wider Mena region.

"We are always on the lookout for up and coming markets to take on companies or make acquisitions where we see underlying value,' said Mr Kheriba. "Brazil is one of the Bric countries that is on the cusp of an upward cycle."

The company's "sweet spot" or ideal ticket size for deals is $50m to $300m and usually targets an Internal Rate of Return of 20 per cent or above.

In real estate, the company has developments in UAE, Eastern Europe and the UK.

The two main UK projects are in London: No 1 Palace Street development overlooking Buckingham Palace and the former Scotland Yard site. Completion of the two projects is slated for 2020. All of its UK properties have a combined gross development value of over $4bn.

“London is a very distinct city, for which nobody can define the demand because demand is international,” said Mr Kheriba. “Brexit has provided people, especially those that live or earn in dollar pegged currencies, an opportunity to buy exceptional properties at discounts.”

Through its debt unit, the company has structured and financed over $3bn of debt, generating returns of 15 per cent per year and has appetite for more deals, especially in Saudi Arabia, the UAE and Egypt.

ADCorp, an Islamic financial institution set up by ADFG and based in Abu Dhabi Global Market, has also completed its funding cycle, raising over $101m. The institution has deployed “a significant amount” of capital at very lucrative returns and will be profitable this year, with possible dividend payouts, Mr Kheriba said.