Abu Dhabi

Abu Dhabi Wealth Fund Invests $450 Million More into Australian Private Credit Fund

One of the largest wealth funds in the world is none other than the sovereign wealth fund in Abu Dhabi. On Tuesday, the fund’s manager made an announcement about their latest investment.

As per the manager, the wealth fund would double the investment they have made in a real estate private credit vehicle based in Australia.

This investment comes at a time when most traditional lenders have become skeptical about the potential of the sector.

The investment

Qualitasdisclosed that about A$700 million, which is about $449 million, would be invested by an Abu Dhabi Investment Authority (ADIA)-owned vehicle.

The said investment would be directed towards a commercial real estate firm based in Australia. ADIA had already made an investment in the same private credit fund last August.

With this investment, its total amount has now increased to A$1.4 billion. Listed in Australia, Qualitasmakes investments in real estate equity and private credit.

The total value of assets under its management is about A$7.5 billion, most of which has been contributed by institutional investors.

Andrew Schwartz, the co-founder of Qualitas, revealed that the total amount of money that the wealth had ready for investment purposes was around A$2.3 billion.

The reason

This is mostly because traditional financiers seem to be backing off, especially in the development and residential sectors.

The real estate sector has made most major public debt markets and banks quite wary because property values will be the ones taking the hit due to higher interest rates.

Likewise, the long-term viability of malls and some offices may also be challenged due to e-commerce as well as the work from home culture.

Last week, one of the largest office landlords in Australia, Dexus’ head, said that real estate companies were finding it difficult to access public bond markets.

Moreover, banks were also becoming very stringent when it came to lending to real estate firms. However, he was quick to add that Dexus was still getting support from its banks.

The deal

The latest deal that was announced on Tuesday would allow ADIA to get an equity stake in the Australian credit fund.

ADIA had gotten share options when it had first made the investment worth A$700 million in the previous August, which had been equal to 9.99% of the issued equity of Qualitas.

Now, ADIA has become eligible for exercising about 2/3rd of the said options and get a price of A$2.50. On Tuesday, the share price of Qualitas had closed at about A$2.48.

If ADIA makes an additional investment of about A$300 million, then it would have access to the remaining options.

However, Qualitas was questioned about whether ADIA had made any disclosures about its plan of exercising the share options, but it had not responded. The same applied to ADIA when asked about the matter.


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