International Holdings Company (IHC)(ADX:IHC), one of the UAE’s foremost holding companies with investments in diversified operating businesses, signed today an Implementation agreement to acquire PAL Cooling Holding LLC (PAL) – subject to final shareholders and regulatory approval – which allows International Holdings Company to enter into the utilities market. The acquisition will see the two companies conduct a share-swap arrangement, with IHC acquiring PAL’s entire share capital in exchange for PAL’s shareholders receiving 1,311,428,571 of IHC’s newly issued ordinary shares as a strategic investor
The acquisition represents a move into a new strategic area for IHC, strengthening the organization’s position as a well-diversified holding company with a portfolio of high-quality investments. The arrangement also marks another step in IHC’s long-term strategy to create and sustain long-term value for its shareholders.
Following the acquisition, IHC’s business interests will include one of UAE’s core district cooling assets, in addition to industrial aquaculture, agricultural, and real estate projects. The utilities space is one of the GCC’s most promising growth sectors, and by acquiring PAL’s portfolio, IHC will gain a number of advantages. These include a higher certainty of continuous cash flow, enhanced profitability, and various cost efficiencies across the company’s current pool of assets. Also, the acquisition also spells good news for IHC’s shareholders. As an ‘accretive acquisition’, the agreement will increase IHC’s earnings per share, while also seeing the combined value of the two companies rise higher than the sum of IHC and PAL as separate entities.
For PAL and its shareholders, the transaction will accelerate PAL’s
strategy as a provider of cleaner, more cost-effective cooling in the GCC’s growing district cooling sector, which today makes a significant contribution to the UAE’s diversification agenda.
“The Addition of PAL and its business to our group marks an important milestone in IHC’s strategic journey and a defining moment in the future prosperity of each organization,” commented H.E. Hamad Abdulla Al Shamsi, Chairman of International Holdings Company PJSC. “Continued profitable growth and creating shareholder value are our main priorities, and we’re achieving both by bringing an organization with such resilience and high growth potential under our wing. The strength of PAL’s portfolio and ambition for the future makes it an ideal fit for IHC as we look to reach new heights across our entire investment pool,” added Al Shamsi.
To date, PAL’s UAE network of district cooling plants comprise a design capacity of 245,000 Refrigeration Tonnes (“RT”), with a current installed capacity of 85,000 RT. PAL also holds long term concessions of over 450,000 RT and a healthy pipeline of future developments, alongside client partnerships with a number of leading development partners. The demand for district cooling and PAL’s services continue to rise as GCC nations focus on progress across their sustainability agendas. District cooling consumes up to 50 percent less electricity compared to conventional air-cooled chillers, while producing fewer CO2 emissions. The technology helps in reducing peak electricity consumption, particularly during the summer months when demand for air cooling is highest.
IHC is being advised by Ernst & Young Corporate Finance Limited as the M&A advisor, alongside White & Case as legal advisor, PwC Middle East as financial due diligence advisor, Colliers International as real estate valuer, and Mott Macdonald as the technical due diligence advisor.
Meanwhile, PAL shareholders have appointed SHUAA Capital psc as its M&A advisor, Linklaters as its legal advisor, and Grant Thornton for financial due diligence. IHC and PAL shareholders have appointed KPMG Lower Gulf Limited as joint independent value
About IHC
IHC, a public joint stock company is a holding company with investments in diversified operating companies. IHC acquires, participate in companies, entities, projects through direct ownership, entering into partnerships and providing financing to such entities in UAE or abroad. Current business interests of IHC include: (i) real estate and contracting, including management, leasing and development of real estate, buying, selling real estate plots, contracting and landscaping; and (ii) fish farming / trading and processing, including investing in aquaculture projects, trading in fish and fish products and general trading of foodstuff; and (iii) investment interests in global procurement and processing entities for different varieties of animal feed.
As part of its strategy, IHC has considered various strategic initiatives to achieve growth in its revenues and profits, including diversification of investments and expansion of existing businesses in the UAE and abroad. As part of its strategy to add shareholder value and diversify its investments, IHC continues to evaluate various opportunities that provide increase in revenues and profits, reduce volatility
About PAL
PAL is one of the key players in the utilities sector of the UAE and is one of the key players in the UAE’s district cooling industry. PAL holds seven long-term concession agreements to district cooling plants, five of which are operational, located across the Emirate of Abu Dhabi and provides district cooling solutions to both commercial and retail projects.
PAL operates its district cooling plants under Build-Own-Operate-Transfer (“BOOT”) arrangements with master developers and enters into long-term concession agreements with the master developers typically for a period of 30 to 35 years. Such long-term concession agreements help PAL generate a steady stream of revenues, high margins and stable cash flows.
