Aldar Investments Properties, a fully owned subsidiary of Abu Dhabi’s biggest-listed developer Aldar Properties, raised $500 million (Dh1.84 billion) through the sale of its debut Shairah-compliant bonds to refinance existing debt.
The seven-year fixed rate US dollar-denominated sukuk was more than twice oversubscribed by bond investors, Aldar said Wednesday in a bourse filing to Abu Dhabi Securities Exchange, where its shares are traded. The Islamic bonds offer a profit rate of 4.75 per cent, underpinned by Aldar Investments’ Baa1 credit rating, it said.
Combined with the Aldar group’s bank facilities, the sukuk deal extends the overall debt maturity beyond five years at an average interest rate of 3.9 per cent, a sign of the strength of Aldar's balance sheet.
“This successful sukuk issuance is a strong result for Aldar and validates the rationale for establishing Aldar Investments,” Greg Fewer, the company's chief financial officer, said. “We want Aldar Investments to be the most cost-effective platform for real estate ownership in the region and this transaction moves us significantly towards that goal.”
Earlier this month the company said it would spin off Dh20bn of revenue-generating assets into Aldar Investments, a new entity able to raise capital independently. About 5,000 residential units and 500,000 square metres of retail and commercial space will be transferred into the new vehicle over the coming weeks, along with Dh6bn of existing debt.
Before the new vehicle was established, Aldar comprised two parts – a real estate development business and an asset management business whose revenues came predominantly from residential and commercial rents.
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The new sukuk benefited from strong regional Islamic investors' demand as well as international institutional investors' interest, the company said.
Aldar on September 17 said that it is launching a tender offer for the repayment of an existing $750m sukuk, which is due to mature on December 3 this year.
Separately, Aldar said it also acquired the 40 per cent shares it did not own in Khidmah, giving it 100 per cent control of the integrated property services company.
The full ownership of the Khidmah will enable Aldar to better serve both direct and indirect customers through the integration of customer management between the developer and facility manager, it said in a statement to the bourse, without disclosing the value of the deal.
Khidmah provides a range of services to developers, landlords and corporate and government entities, including property management, facilities management, and consultancy.
“Aldar has long been committed to the ongoing success of this business, and this acquisition reinforces that commitment,” Talal Al Dhiyebi, chief executive of Aldar Properties, said. “From an Aldar perspective, customers have long viewed Khidmah as an extension of our brand and values, and this ensures that we now have complete control over that process.”
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Nepotism is the name of the game
Salman Khan’s father, Salim Khan, is one of Bollywood’s most legendary screenwriters. Through his partnership with co-writer Javed Akhtar, Salim is credited with having paved the path for the Indian film industry’s blockbuster format in the 1970s. Something his son now rules the roost of. More importantly, the Salim-Javed duo also created the persona of the “angry young man” for Bollywood megastar Amitabh Bachchan in the 1970s, reflecting the angst of the average Indian. In choosing to be the ordinary man’s “hero” as opposed to a thespian in new Bollywood, Salman Khan remains tightly linked to his father’s oeuvre. Thanks dad.
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
