International law firms Allen & Overy and Clifford Chance have been mandated to advise Abu Dhabi-based property developers Aldar Properties and Sorouh Real Estate on their proposed merger, three sources told The Brief.
Allen & Overy is representing Aldar, while Clifford Chance is advising Sorouh on the deal, according to the sources. However, they declined to comment further on the potential size or terms of any marriage between the two firms. Clifford Chance’s team is being led by corporate partner Mohammed Al-Shukairy and real estate counsel Steven Henderson, one of the sources disclosed.
The state-backed move to combine the two property developers, creating a company worth about $15 billion in assets, is aimed at stabilising the brittle real estate market in Abu Dhabi which is yet to recover from the downturn following the 2008 global financial crisis. It is also expected to reduce sovereign wealth fund Mubadala’s stake and exposure to the troubled Aldar.
On its part, Mubadala had participated in a government rescue of Aldar last year by subscribing to a $2.8 billion convertible bond issued by the developer in March 2011. The fund, with assets worth around $46 billion, converted a portion of the bond to equity in December. Full conversion, therefore, could eventually raise Mubadala's stake to 60 percent.
Bankers told Reuters in March this year that a deal is likely to be effected through a share swap, which would dilute Mubadala's sizeable stake in Aldar, which has been hit by stagnant sales and falling asset prices. The Abu Dhabi government has given Aldar nearly $10 billion in bailout funds, almost equivalent to the amount it extended to neighbouring emirate Dubai at the height of its 2009 debt crisis. ALB
Shaheen Pasha is Middle East Regional Editor at ALB. Follow her on Twitter: @ALB_TheBrief.
Additonal reporting by Praveen Menon and Dinesh Nair at Reuters.
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