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Abu Dhabi Funds Invest $2.1 Billion in ADNOC Gas Pipelines

Abu Dhabi Funds Invest $2.1 Billion in ADNOC Gas Pipelines
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Abu Dhabi Funds Invest $2.1 Billion in ADNOC Gas Pipelines

Abu Dhabi Funds Invest $2.1 Billion in ADNOC Gas Pipelines

The Abu Dhabi National Oil Company, ADNOC, announced today that Abu Dhabi Pension Fund, ADPF, and ADQ, one of the region’s largest holding companies, will invest AED7.7 billion (US$2.1 billion) into ADNOC gas pipeline infrastructure assets.

Under the terms of the agreement, ADNOC will divest 20% in ADNOC Gas Pipelines HoldCo LLC, a wholly owned ADNOC entity that holds 100% of ADNOC’s interest in ADNOC Gas Pipeline Assets LLC (ADNOC Gas Pipelines), to ADPF and ADQ.

ADNOC Gas Pipelines is a subsidiary of ADNOC with lease rights to 38 gas pipelines covering a total of 982 kilometers.

In July 2020, a consortium of global investors, comprising Global Infrastructure Partners, Brookfield Asset Management, Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan Board, NH Investment & Securities and Snam (the Consortium), invested $10.1 billion for a collective 49% stake in the same select ADNOC gas pipeline infrastructure assets, state news agency WAM reported.

For his part, UAE Minister of Industry and Advanced Technology and ADNOC Group CEO welcomed the partnership with both Abu Dhabi Pension Fund and ADQ.

"Joining our global investor consortium partners in this landmark energy infrastructure investment, the addition of these high-caliber UAE investors sets a new benchmark for leading global and domestic institutional investors to deploy long-term equity capital into key ADNOC energy infrastructure assets," said Sultan Al Jaber.

Also, Khalaf Abdullah Rahma Al Hammadi, Director General of Abu Dhabi Pension Fund said: "The Fund is keen to implement the directives of the UAE’s wise leadership and achieve the Abu Dhabi government's vision aimed at building strong partnerships between major national institutions to support the national economy and achieve the highest possible benefits."

Since announcing the expansion of its partnership and investment model and the more proactive value management of its assets and capital in 2017, ADNOC has entered the debt capital markets for the first time, issuing a $3 billion bond backed by the Abu Dhabi Crude Oil Pipeline.

ADNOC also recently closed innovative investment partnerships with leading global institutional investors and operators in both its oil and gas pipelines and non-oil and gas strategic infrastructure.

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Turkish Companies ‘Paying the Bill’ as Political Crisis Roils Economy

Cats watch as fishermen gather their catch at Besiktas neighborhood in Istanbul on March 28, 2024. (AFP)
Cats watch as fishermen gather their catch at Besiktas neighborhood in Istanbul on March 28, 2024. (AFP)
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Turkish Companies ‘Paying the Bill’ as Political Crisis Roils Economy

Cats watch as fishermen gather their catch at Besiktas neighborhood in Istanbul on March 28, 2024. (AFP)
Cats watch as fishermen gather their catch at Besiktas neighborhood in Istanbul on March 28, 2024. (AFP)

Turmoil unleashed by the arrest of Türkiye’s leading opposition figure last week has sent shockwaves through the private sector, forcing companies to rethink strategy and dig in for a period of uncertainty and potential economic instability.

The detention of Istanbul Mayor Ekrem Imamoglu, who leads long-serving President Recep Tayyip Erdogan in some polls, has provoked the largest anti-government protests in a decade, leading to mass arrests and international condemnation.

The move also sent the lira currency to a record low, fueling a sell-off of Turkish assets that has destabilized company balance sheets and driven up already high borrowing costs.

Company officials told Reuters that Turkish businesses across sectors were scrambling to reassess risk, with some already pausing planned investments and slashing budgets.

"The industrialists now have to pay the bill for a crisis they did not cause," said Seref Fayat, chairman of System Denim, which manufactures garments for leading Western brands and exports them to Europe and the United States.

Fayat, who also heads a garment industry lobby group, said his credit costs have spiked due to the market turmoil.

He had been drawing up budgets for a second-half expansion of his business in anticipation of an expected rebound in customer demand from Europe.

"We immediately shelved these plans following the latest developments," he said.

The lira has recovered somewhat after touching a record low of 42 to the dollar, but only after the central bank stepped in to prop up the currency.

And businesses worry more pain is on the way.

Expectations of declining inflation and lower interest rates following the adoption of an orthodox economic program that had promised Turks future relief after years of soaring prices and currency crashes, now seem in doubt.

In an unscheduled meeting last week, the central bank raised its overnight lending rate by two percentage points to 46%.

According to information provided to Reuters by bankers, short-term commercial loan interest rates have increased from an average of 42-43% to 52-53%, with some rates as high as 60%.

Morgan Stanley now forecasts any cuts to the central bank's policy rate will be shelved until June. And Goldman Sachs said it expected a hike in the policy rate by 350 basis points.

'EVERY COMPANY NEEDS A PLAN'

"The latest developments will affect companies' investment expenditures the most," Hakan Kara, a former central bank chief economist now on faculty at Bilkent University in Ankara, said on X, pointing out that investment had already been slowing.

"This will probably become even more apparent in the short-term."

The government has said the recent economic turmoil would be limited and temporary. But some company officials worry the crisis may only be beginning.

Elections are set for 2028 when Erdogan, who has dominated Turkish politics for more than two decades, will reach his term limit.

Many, however, see the arrest of Imamoglu, who was jailed on Sunday pending trial for graft, as an early indication he could seek to remain in power, either through an early election or constitutional changes that would likely face public opposition.

Mehmet Buyukeksi, a board member at Ziylan, which operates in retail and real estate, said expectations of a more positive business outlook in Türkiye based on government efforts to right the economy as well as strengthening demand were now less certain.

Improvements, including lower borrowing costs, that he had been expecting to see in July, he is now pushing back to September, he said.

And there are other knock-on effects.

One company official said some firms were carrying out human resources risk assessments, worried that they could face blowback if their employees participate in protests or share political content on social media.

Some conglomerates are reevaluating their risks in terms of exchange rates, inflation, funding costs and are significantly increasing the likelihood of negative impacts in their assessments, the company official said.

And a mergers and acquisitions consultant said that, while some foreign firms might look past criticisms that the Turkish government's actions are growing increasingly undemocratic, few will pour investment into an economically fraught environment.

"Everyone will re-do their calculations and books," said Fikret Kaya, the general manager of plastics and industrial equipment manufacturer Kayalar.

"We have had to make monthly evaluations that we used to make quarterly. I think every company needs to make a plan."