Abu Dhabi's ADQ shores up liquidity with up to US$3bn club loan

LONDON, July 3 (LPC) - Abu Dhabi state-owned holding company ADQ is in the market for a US$2bn-$3bn loan, which is expected to be provided by a club of international lenders, according to banking sources.

It is ADQ’s first club loan from international banks and is part of a wider fundraising spree to shore up liquidity for the business, which holds some of Abu Dhabi’s most important non-oil related assets, the bankers said.

The deal is being self-arranged by ADQ and is expected to involve a group of five or six banks, the bankers said. The borrower was originally looking for a five-year tenor but is likely to end up with three years.

“Five years would be a bit of a stretch, I think three years is more likely,” one banker said.

Banks are keen to deploy cash into Abu Dhabi, the largest emirate in the UAE, rated AA by S&P and Fitch and Aa2 by Moody’s, but pricing is very tight, meaning all but a handful lenders will be excluded.

“Appetite for an Abu Dhabi deal like this is not limited to the five or six banks that will eventually do the deal, but they are the only ones who can afford to do it. It’s where everyone wants to be but the borrower has high pricing expectations,” said a second banker.

Alongside the club loan, ADQ, formerly known as Abu Dhabi Developmental Holding Company, has also been raising a number of jumbo local currency dirham-denominated bilateral loans.

“There are definitely two bilaterals being discussed and it might end up being three. One of them is bigger than the club loan,” the second banker said.

ADQ did not respond to a request for comment.

ADQ¸ chaired by Sheikh Tahnoon Bin Zayed Al Nahyan, is raising the cash to shore up funds for its existing portfolio companies, the second banker said. They include some of the UAE’s biggest assets, including Abu Dhabi Securities Exchange, Abu Dhabi Airports and Senaat, one of the UAE’s largest industrial investment holding companies.

“They now have quite a few critical government entities under them. They don’t need immediate support but I guess having and keeping liquidity is key for when they might need it and to help any businesses which might have suffered due to Covid,” he said.

Cash could also be needed to fund ADQ’s ongoing acquisition spree. In March it acquired a 50% stake in Abu Dhabi-based agriculture firm Al Dahra Holding and it is among the bidders for Jordan food producer Al Jazeera Agriculture Company. It is also close to acquiring Jordan’s Al-Nabil Food Industries, which produces frozen foods.

ADQ was established in 2018 and has a portfolio of 90 assets across 11 sectors in Abu Dhabi’s non-oil economy, including media, utilities, real estate, healthcare, transport and tourism. (Editing by Christopher Mangham)