Chief Strategy Officer at Alpha Dhabi, Derek Nicholson, informed Zawya in a recent interview that Alpha Dhabi Holding, a conglomerate headquartered in Abu Dhabi, expects to spend 30 billion dirhams ($8 billion) in the next five years, and recent divestments give it extra funds to grow.
Such divestments as the pull out of Alpha Dhabi in Modon that yielded AED 5.3 billion are included in the push towards speeding up the conglomerate’s international expansion and capital deployment plan.
Therefore, the company has a two-fold approach. One assists portfolio companies in implementing their growth strategies by exercising governance. The other leverages its own funds and recycles capital with IPOs and capital reinvestment into expanding sectors.
The conglomerate has an operating presence in 45 countries, delivering 13 percent of revenue, and is focusing its acquisitions on providing scale, synergies, and strong returns as opposed to merely having a geographic presence.
He said, “We’re not focused on planting flags in new markets for the sake of it. […] instead, we seek acquisitions with the right risk profile, returns, and synergies. Our outlook is global—Asia, Europe, East and West—wherever scale and strategic fit exist.”
However, the Alpha Dhabi prefers conservative leverage on funding and perceives the trend as interest rates are peaking and falling.
Nicholson stated, “We would encourage them [portfolio companies] to take on more debt, but within benchmarks that are right for their particular industry and aligned with their business plans and cash flows.”
The group is also venturing into the debt markets of Abu Dhabi to diversify its financing, including a possible debt issue. Although IPO schedules are subject to the market, Nicholson indicated that any of its private portfolio companies would be free to have an IPO, provided the market conditions are perfect.
Of Trojan, one of the biggest client construction players, which is in initial consideration of a listing, Nicholson stated that the group would prefer to add value to the company before doing so.
He disregarded the belief that the underperformance of recent UAE IPOs post-listing would dampen the market sentiment, noting that fundamentals would not change and capital markets would remain robust.
He added that “From our meetings with banks, I’ve seen the IPO pipeline—it’s larger than ever in terms of companies considering going public. It is nice to see there’s such a strong appetite for companies to move from private to public. That gives us confidence that, come the right time for the right transaction, it will be successful.”
As of IPOs, Alpha Dhabi might monetize the sizeable stakes it has in firms by accelerated bookbuilds (ABBs) or strategic sales.
Nicholson said, “The advantage we have is flexibility. There’s no pressure to [launch an] IPO within a fixed timeline, and we can take a long-term view.”
