The Saadiyat Free Zone Authority in Abu Dhabi is actively seeking strategic equity partners for the Saadiyat Development Company (SDC), which will operate the planned $3,300 million Saadiyat free zone project. Local and international firms will be offered $1,650 million equity.
Subscribers will become founder shareholders and members of SDC's board. The remaining $1,650 million will be raised through a local and international public offering expected to take place by June (see UAE).
Of the $3,300 million proceeds, $2,600 million-$3,000 million will be invested in short-term escrow accounts, AA and AAA securities. Returns from the investment will be used for the infrastructure development. The remaining $300 million-700 million will be used as SDC's working capital.
The authority has recently made a presentation to six prospective investors, including the International Finance Corporation (IFC), Scudder, Stevens & Clark, Templeton Global Investors, Flemings Investment Management, Alliance Capital, and Aberdeen Asset Managers. It has made similar presentations to Japanese and German firms.
The authority expects an internal rate of return of 24.8 per cent over a 25-year period from its activities, which will include leasing and renting the commercial and residential properties, the sea port, airport, storage, handling, exhibition, and trading facilities.
It will also act as a commodities broker at the Saadiyat stock exchange, in which it will be one of the regulators. Talks have been held with the US-based Andersen Consulting for the development of an electronic stock exchange.
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