Abu Dhabi’s Aldar creates $5.4bn real estate giant

Yas Island in Abu Dhabi, one of Aldar's flagship developments. (Supplied)
Updated 12 September 2018
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Abu Dhabi’s Aldar creates $5.4bn real estate giant

  • New unit could eventually list shares in IPO
  • Property company owns some of Abu Dhabi's top landmarks

DUBAI: Aldar Properties, the Abu Dhabi-government controlled real estate group, is to spin off its property assets into a new company that could eventually list separately on a stock exchange in an initial public (IPO) offering worth billions of dollars.
The developer — which has been responsible for some of the biggest projects in the emirates, including the F1 track on Yas Island — announced the creation of Aldar Investments, as a fully owned subsidiary that will hold property assets valued at 20 billion dirhams ($5.4 billion).
The move “is designed to drive greater operational and capital efficiencies that will unlock value for shareholders and create the foundation for a new phase of accelerated growth,” Aldar said at a launch event at Abu Dhabi Global Market (AGDM), the UAE’s capital’s financial free zone, where the new company will be based.
“The creation of Aldar Investments allows Aldar to spin off its recurring-revenue assets into a 100 percent-owned separate entity, with greater independence, focused governance and a more efficient cost structure,” the statement added.
Although the statement did not mention the possibility of an IPO, Aldar Properties chief executive Talal Al-Dhiyebi told journalists that it could consider a market listing at some stage in the future. “We are ready to monetize this business at the right time if it’s going to deliver more shareholder growth,” he said on CNBC television.
An IPO is not the only possible structure, however. One financier close to the company — who did not want to be named — said: “This is piece of financial engineering, but an honest one that creates value. It has all the features of a real estate investment trust, and that could imply long-term asset management rather than a market listing. It gives them a lot of options and is a smart way to go.”
Shares in Aldar Properties, currently listed on the Abu Dhabi Securities Exchange (ADX), fell just over 2 percent on the announcement.
The new vehicle, which owns some of Abu Dhabi’s most recognized assets such as Yas Mall, The Gate Towers and over 2,400 hotel rooms near the F1 track, as well as the distinctive “coin” headquarters building, has been assigned a Baa1 rating by Moody’s ratings agency — the highest rating for a non-government corporate in the region and one notch above its parent company.
“Aldar Investments can access capital on more favorable terms, independently of Aldar, and intends to issue a new sukuk in the near term. Aldar Investments has set formal debt and dividend policies consistent with the current asset management business providing further clarity for investors,” the parent company said.
Mohamed Khalifa Al-Mubarak, chairman of Aldar Properties, called the move “another significant milestone in Aldar’s history.”
He added: “As the owner of 20 billion dirhams of prime real estate assets, Aldar Investments provides an opportunity for investors to benefit from Abu Dhabi’s AA rated economy.”
The move is also a boost for ADGM, bringing billions of dollars of assets within its jurisdiction on Al Maryah Island. Ahmed Al-Sayegh, the chairman of ADGM, said: “We are delighted that ADGM is continuing to be utilized not only as a platform for international business, but also to support our domestic businesses in their ongoing development and expansion.”
This move follows the recent Abu Dhabi Executive Council Decree, extending full onshore real estate ownership rights to Aldar Properties and its subsidiaries in Abu Dhabi.
Aldar recently announced significant joint ventures with its Dubai counterpart, Emaar, which has launched separate IPOs of its property, hotels and leisure businesses in recent years.


Russia’s Rostec doing brisk arms trades despite sanctions

Updated 21 November 2018
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Russia’s Rostec doing brisk arms trades despite sanctions

  • Arms giant Rostec is seeing strong demand for its advanced anti-missile systems
  • Since Russia’s intervention in Ukraine in 2014, the world’s second-largest arms exporter has been hit by several rounds of sanctions by Washington and EU

MOSCOW: Arms giant Rostec is seeing strong demand for its advanced anti-missile systems despite international sanctions against the Russian defense sector, chief executive Sergei Chemezov told AFP in an interview.
Chemezov, an ally of President Vladimir Putin, is nonetheless also charting a course to increase sales of Rostec’s non-military products.
Since Russia’s intervention in Ukraine in 2014, the world’s second-largest arms exporter after the United States has been hit by several rounds of sanctions by Washington and the European Union (EU). Rostec and Chemezov himself have been specifically targeted.
“The sanctions are beneficial to US companies competing with us,” the chief executive noted in an interview conducted via email.
“At the same time, we are well aware of the negative attitude of many foreign companies, of our traditional foreign partners, to the sanctions.”
An economist by training, Chemezov built a career in the import-export trade and met Putin when both were in Dresden, Eastern Germany, in the 1980s.
Chemezov worked for an industrial group, Putin for the KGB.
Now the head of the country’s state-owned arms giant, Chemezov points to the S-400 air defense systems as an example of foreign demand for Rostec products despite the sanctions.
In late October, India agreed to a deal for multiple batteries worth more than $5 billion despite warnings from Washington.
“Currently, S-400 contracts are being implemented with Turkey and China,” Chemezov added.
“We cannot yet tell about future plans, however, despite the active propaganda of the United States against Russian armaments, there is demand for the S-400, and it is big.”
According to Bloomberg, an S-400 battery costs between $475-$625 million, compared with $550-$700 million for a US-made Patriot system, and boasts greater range and interception capabilities, and a faster set-up time.
The Rostec chief said the group was doing all it could to minimize the sanction’s impact and argued that they were also detrimental to the US and EU.
Rosoboronexport, the Rostec unit charged with selling arms abroad, has outstanding orders worth more than $50 billion, he said.


Rostec was created in 2007 to transform the arms industry inherited from the Soviet Union.
It comprised more than 400 businesses, many of which were in ruins, and was saddled with 630 billion rubles in debt, roughly equivalent to $9.6 billion today.
The group now oversees more than 700 businesses, from arms manufacturers to camera and plane makers. Total sales in 2017 were 1.6 trillion rubles, or a little more than $22.8 billion.
While Rostec is modernizing its military production, it also aims to make civilian products account for 50 percent of total output by 2025, compared with 28 percent at present.
“If we want to continue our sustainable development and remain adequately competitive, we must focus on civilian products,” Chemezov said.
“We are well aware that supplies of arms have boundaries and limits.”


The group has also successfully opened some subsidiaries to private investors and presents Kalashnikov, maker of the renowned AK-47 assault rifle, as an example.
Now 75-percent controlled by private investors, once-ailing Kalashnikov has rebounded and recently announced 1,700 new hires to manage increased exports.
“The concern nowadays is a manufacturer of not only small arms, but also unmanned aerial vehicles, fast boats, electric motorcycles, other hi-tech civilian products,” Chemezov noted.
Rostec might now allow investors to buy into the optical-electronic systems group Shvabe as well.
Shvabe recently attracted attention with news it would reboot manufacturing of the iconic Soviet camera Zenit in partnership with the German firm Leica.
In aviation, Rostec is taking over UAC, which groups leading Russian manufacturers of military and civilian aircraft, including Antonov, Tupolev and Sukhoi.
“We are ready to compete with Boeing and Airbus for the global aviation market,” Chemezov said.
The group’s efforts should propel Rostec among the world’s 10 biggest industrial corporations in terms of revenue, he said.