Tuesday, Sep 16, 2008
By Maria Abi-Habib
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--ADIC-UBS Infrastructure Investment Ltd., a 50-50 joint venture between Abu Dhabi Investment Co. and UBS Asset Management, may invest as much as $5 billion in Mideast projects by the end of 2009 and float them on regional bourses, a top company executive told Zawya Dow Jones.
"These projects could be floated in their respective markets or we could float a holding company that combines all these projects to give investors diversification across asset type and geography," Mark Thompson, ADIC-UBS Infrastructure's chief executive, said in an interview in Abu Dhabi late Monday.
If a holding company is created, it would float in about five years, Thompson added.
Launched in February, the ADIC-UBS joint venture focuses on infrastructure investments in the Middle East, North Africa and Turkey. ADIC is majority owned by the Abu Dhabi Investment Council, the investment arm of oil-rich Abu Dhabi emirate.
Flush with cash from four years of high oil prices, regional countries are using their wealth to upgrade key infrastructure to accommodate rapid economic growth and to diversify their oil and gas dominated economies.
Funding requirements are the highest for oil, power, water desalination, housing and transport infrastructure, with investments worth hundreds of billions of dollars required for projects across the region.
One of the biggest projects ADIC-UBS Infrastructure will invest in is a $4 billion power plant in Saudi Arabia. Details of the deal will be announced at the end of September, Thompson said.
The company is also eyeing two port projects - one in Tunisia and one in Jordan, where the government recently launched a tender worth $500 million to develop Aqaba port on the Red Sea.
"The Jordanian government is looking to the private sector for its infrastructure needs," Thompson said.
In addition, ADIC-UBS Infrastructure "just started" looking into the planned expansion of Enfidha port in northeastern Tunisia, he added.
In Abu Dhabi, the company will build a healthcare project worth "a couple hundred million dollars," Thompson said. The venture is talking to several banks to secure funding for the project, with construction set to start as early as next year.
ADIC-UBS Infrastructure is also targeting a sewage treatment plant in Bahrain worth up to $500 million, Thompson said. The company is presently setting up a consortium to submit a bid for the scheme to the Bahraini government.
FUNDING
ADIC-UBS Infrastructure, which plans to hold a seat on the board of each completed project, finances the bulk of its investments through funds, Thompson said.
Earlier this year, the joint venture launched the ADIC-UBS Infrastructure Fund I worth $600 million.
"Any equity requirements we have would be financed through this and subsequent funds," Thompson said.
Funding for most projects is 70% equity and the rest is debt borrowed from European banks in U.S. dollars, Thompson said, adding that financing margins of European banks are better than those of Gulf lenders.
"For projects where the government provides a low risk profile, we can take up to 90% debt," he added.
Thompson said he isn't worried that the credit crunch affecting Western markets will make it harder for his company to take out loans.
"Banks are being far more diligent now than in the past and this is a good thing for us. Good projects with good contractors will happen whereas the weak ones won't," Thompson said.
-By Maria Abi-Habib, Dow Jones Newswires; +9714 364 4962; maria.habib@dowjones.com
Copyright (c) 2008 Dow Jones & Company, Inc.
(END) Dow Jones Newswires
16-09-08 1021GMT
