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Sun 8 Jul 2007 09:43 AM

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Abu Dhabi eyes private equity stake

Abu Dhabi Investment Authority is in talks to acquire a 10% stake of a private equity firm for $1.5bn.

Abu Dhabi Investment Authority (ADIA) is locked in talks to acquire a 10% stake of private equity firm Apollo Management LP for around $1.5 billion.

Leon Black, who owns 50% of Apollo, was in Abu Dhabi last week to negotiate a deal, but there is said to still be a gap in how both sides value the firm, according to various media sources.

An agreement between Apollo and ADIA would deepen ties between the groups and push along the PE business's plans to raise money through a public offering.

Blackstone Group sold 10% of the firm to an arm of the Chinese government just before the private equity firm's June IPO. The stake allowed Blackstone to gain a key partner in its Asian expansion and to raise an additional $3 billion on top of the $4 billion it raised through the IPO.

Blackstone recently purchased the Hilton hotels group at a premium price of $26 billion, around 40% more than its value.

Credit rating agency Fitch Ratings recently assigned the emirate of Abu Dhabi foreign currency and local currency Issuer Default ratings of AA with a stable outlook.

"The ‘AA' rating reflects Abu Dhabi's track record of economic and political stability, exceptionally strong public and external balance sheets as well as its huge per capita hydrocarbon endowment that underpins one of the highest incomes per head of any Fitch-rated sovereign," said Richard Fox, head of Fitch's Middle East and Africa sovereign rating team.