Abu Dhabi’s sovereign investor, L’imad, through its subsidiary ADQ, has made a voluntary conditional cash offer to acquire the remaining 24.58% of AD Ports Group shares that it does not already own. This move, if fully taken up, would effectively privatize AD Ports Group, valuing the capital’s ports and logistics business at roughly $8.7 billion (AED32 billion). The offer price is AED6.25 ($1.70) per share, which represents a 23% premium to AD Ports Group’s last closing share price of AED5.10 before the offer announcement on August 17. It is also 25% above the one-month volume-weighted average price and 31% above the three-month volume-weighted average price. Notably, this offer is almost double the AED3.20 price at which AD Ports came to market in 2022, representing a 95% premium over its IPO subscription price.
While some observers initially viewed this as a potential retreat from Abu Dhabi's public market strategy, sources with knowledge of the transaction indicate it is a one-off strategic decision for AD Ports rather than a change in direction for the Abu Dhabi Securities Exchange (ADX). AD Ports Group has experienced rapid growth since its 2022 listing, driven by acquisitions and investments globally, which has placed pressure on its balance sheet. The company's total borrowings stood at approximately AED26 billion at the end of the first quarter, with net debt equivalent to 3.9 times top-line earnings. Free cash flow was negative AED348 million due to AED1.35 billion in quarterly capital expenditure. The offer document describes AD Ports' growth strategy as "complex, capital intensive and long-term," requiring further equity raising or borrowing, which has resulted in "elevated financial leverage levels."
The privatization allows L’imad to finance AD Ports' multi-year strategic responsibilities, particularly given the increased importance of ports and logistics infrastructure due to recent geopolitical events like the US-Iran war and Strait of Hormuz disruptions. This provides the company with freedom to operate without the constraints of public market expectations for short-term returns or dividends, which AD Ports has not yet paid. Minority shareholders, including Norway's sovereign wealth fund, are being offered an attractive exit at a respectable premium. The offer doesn't include an automatic minimum acceptance threshold, and it's unclear if L'imad could compel remaining shareholders to sell if the take-up exceeds 90%. AD Ports Group has appointed HSBC Bank Middle East as its financial adviser to oversee the planned takeover bid. This situation mirrors Dubai's DP World, which also went private in 2020 after public markets' preference for short-term returns clashed with the long-term investment horizons required by the ports and logistics industry. The need for significant capital and the critical national infrastructure status of these assets make the UAE state sector, with its substantial financial resources and long-term vision, a more suitable home for them.
