Abu Dhabi Pension Fund and ADQ to invest $2.1bn in Adnoc pipeline assets

They join a consortium of the world’s leading infrastructure and sovereign wealth funds in a $20.7bn investment in Abu Dhabi’s gas pipelines.

General view of the ADNOC headquarters is seen in Abu Dhabi, United Arab Emirates, December 23, 2018. Photo taken December 23, 2018. REUTERS/Hamad I Mohammed
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Abu Dhabi Pension Fund and ADQ will invest $2.1 billion in Adnoc’s gas pipeline infrastructure, as the energy company looks to open up opportunities for local investors.

The two firms will take a 20 per cent stake in an entity that holds 100 per cent of Adnoc’s interest in the gas pipelines.

In July, a consortium of the world’s leading infrastructure and sovereign wealth funds, signed an agreement worth $20.7bn to invest in Abu Dhabi’s natural gas pipelines infrastructure.

Global Infrastructure Partners, Brookfield Asset Management, Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan Board, South Korea's NH Investment & Securities and Italy’s Snam took stakes in Adnoc’s lucrative midstream assets.

The transaction, the largest single global energy infrastructure deal this year - and the Middle East's biggest - will unlock $10.1bn of foreign investment into the UAE.

The addition of ADPF and ADQ to the transaction sets a “benchmark” for global and local capital to deploy long-term equity into key energy infrastructure in the emirate, said Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and Adnoc Group chief executive.

“This follow-on investment will generate stable, long-term value and returns to both Abu Dhabi Pension Fund and ADQ’s stakeholders,” he said.

"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.”

This is the second time the Abu Dhabi Pension Fund has taken a stake in Adnoc’s midstream assets. The fund invested Dh1.1bn in Adnoc’s oll pipeline infrastructure last year, joining international private equity companies BlackRock and KKR.

BlackRock, the world’s biggest asset manager as well as New York-based KKR paid up to $4bn upfront to lease some of Abu Dhabi’s pipeline assets last year.

Adnoc also joined hands with ADQ, the emirate’s industrial holding company earlier this year to hasten the development of chemicals manufacturing at Ruwais.

The companies will evaluate and invest in "select, anchor chemicals projects" and attract other investors to the industrial hub in the emirate's Al Dhafra region.

In an interview with The National in September, Adnoc Group chief financial officer Ahmed Al Zaabi said the company was committed to providing opportunities for local investors as its efforts to attract foreign capital pick up pace.

"There's always going to be a place for local investors," Mr Al Zaabi said.

Adnoc also listed 10 per cent of its distribution business on the Abu Dhabi Securities Exchange in December 2017, allowing local investors to participate in the share offering.

ADQ's investment in Adnoc's gas infrastructure is an opportunity for the holding company to tap into "stable, predictable cash flows", ADQ chief executive Mohamed Alsuwaidi said in a statement.

"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," he added.

Adnoc has opened up other opportunities for global and local investors. In September, the company signed an agreement worth $5.5bn with Apollo Global Management to lease some of its properties on a long term basis, as part of its plans to unlock capital from its non-core assets.