Senaat has refinanced a three-year $267 million revolving credit facility to support its corporate needs. Fatima AL Marzooqi / The National
Senaat has refinanced a three-year $267 million revolving credit facility to support its corporate needs. Fatima AL Marzooqi / The National
Senaat has refinanced a three-year $267 million revolving credit facility to support its corporate needs. Fatima AL Marzooqi / The National
Senaat has refinanced a three-year $267 million revolving credit facility to support its corporate needs. Fatima AL Marzooqi / The National

Business

Abu Dhabi’s Senaat refinances $267m loan

The credit facility will support the company's general corporate funding needs

Fareed Rahman
Fareed Rahman

August 27, 2020

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  • Arabic

Abu Dhabi’s industrial holding company Senaat has refinanced a three-year $267 million (Dh980.6m) loan to support its corporate funding needs, the state-owned company said on Thursday.

The size of the competitively-priced credit facility was increased after its initial call for $200m was heavily oversubscribed, the company said without giving the pricing details.

BNP Paribas acted as sole coordinator and bookrunner on the deal.

The new facility, which replaced a loan that matured in December 2019, will be allocated among 12 local, regional and international lenders in proportion to their proposed subscriptions, Senaat – a part of the Abu Dhabi's holding firm ADQ – said.

“We are pleased to see such a resounding vote of confidence from the regional and global financial community as indicated by the response received for Senaat’s debt refinancing,” Khalifa Sultan Al Suwaidi, chairman of Senaat and chief investment officer at ADQ, said.

“Senaat’s operating companies are strong and competitive industrial businesses that are the cornerstone of Abu Dhabi’s industrial sector and are contributing to the diversification of Abu Dhabi’s economy.”

Corporate borrowers, financial institutions, government-related entities and sovereigns from the region are looking to shore up their finances in the midst of historic low interest rate globally.

Senaat manages more than Dh27.2 billion of industrial assets in key industrial sectors – metals, oil and gas services, construction and building materials and food and beverages manufacturing. In March, ADQ assumed the ownership of Senaat.

ADQ's portfolio of assets includes several large industrial and manufacturing companies in non-oil sectors such as transportation, metals and power, including Abu Dhabi Ports, Etihad Rail, Emirates Steel and Taqa. It also holds stakes in media businesses Abu Dhabi Media and TwoFour 54, insurer Daman, health services provider Seha and the Abu Dhabi National Exhibitions Company.

Earlier this month, ADQ announced a partnership with the Abu Dhabi Investment Office to develop the emirate's start-up ecosystem and attract further investments into its digital economy.

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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.”

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