ADQ, IHC Capital propose merger with Q Holding to create $12bn entity

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Abu Dhabi’s ADQ and IHC Capital Holding have submitted an offer to Q Holding to combine ADQ’s 100 per cent shareholding of Abu Dhabi National Exhibitions Company (ADNEC), as well as its majority ownership interest in Modon Properties (Modon), and IHC Capital’s entire interest in Modon into Q Holding.

The proposed transaction would create one of the largest real estate, hospitality, events, and catering platforms in the region that would enhance Abu Dhabi’s position as an integrated real estate and hospitality leader.

Benefits of the proposed merger

The proposed combination will form a larger and more efficient entity with an optimised cost structure.

The consolidation of assets offers diversification benefits, by mitigating industry-specific risks and securing more investment opportunities, as well as enhancing supply chain efficiencies that will improve profitability.

The larger balance sheet and robust cash flows will deliver the combined entity with increased financial flexibility, enabling more strategic investments, debt reduction, and potential shareholder distributions.

The accumulated benefits of this combination would be directly available to public investors, positioning the new Q Holding as an attractive value proposition for future investment.

The combined group would have an implied market capitalisation of approximately Dhs44bn (approximately $12bn) with an extensive portfolio of real estate developments, venues, land plots and hospitality assets.

Upon closing of the proposed transaction, Q Holding will issue to ADQ and IHC Capital a convertible instrument that would convert into approximately 9,491 million ordinary shares in the capital of Q Holding.

The price at which the convertible instrument will convert into shares in Q Holding is Dhs2.70 per share. The offer implies an equity valuation of approximately Dhs18.5bn for Q Holding.

ADQ, IHC stakes if proposed merger is successful

Following completion, ADQ and IHC Capital would respectively own approximately 38.7 percent and 19.4 percent of the entire issued share capital of Q Holding.

Mohamed Hassan Alsuwaidi, MD and CEO at ADQ said: “This proposed offer provides a unique opportunity to generate value by bringing together key real estate and hospitality assets, creating an Abu Dhabi champion that fuels its ambitions. The combined assets would benefit from increased scale and new revenue opportunities that will position it well for future growth.”

ADQ and @ihc__official offer to combine their shareholdings in @ModonProperties along with ADQ’s shareholding in @ADNECGroup with @q_holding to create a regional leader across real estate, events and hospitality.#ADQ #InvestingInGrowth #InAbuDhabi #Hospitality #RealEstate pic.twitter.com/KHbZYO5tp1

— ADQ (@Adq_Official) August 2, 2023

Syed Basar Shueb, IHC’s CEO and MD, said: “We firmly believe that the proposed transaction of consolidating Abu Dhabi’s leading tourism and real estate assets into Q holding will prove to be significantly beneficial to the growth and the development of the industry. We envision this as a strategic alignment that will not only magnify our capacity for exceptional real estate development but also effectively bridge the gap between tourism and real estate sectors that is poised for further growth and expansion.”

If the board of Q Holding recommends proceeding with the transaction, it will be subject to shareholder and regulatory approvals.

In July, Aldar Properties, IHC and ADNEC Group agreed to merge their property and facilities management businesses within the Aldar Estates platform.

The merger will see IHC and ADQ-backed ADNEC become strategic shareholders in the merged entity, with Aldar retaining a majority stake and control of the combined platform.

Read: Aldar, IHC, ADNEC merge property, facilities mgmt assets