Goldman Sachs, other intl banks to advise on Aldar, Sorouh merger

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High-rise buildings, developed by Sorouh Real Estate, right, stand on Al-Reem island in Abu Dhabi, United Arab Emirates. Photo - Duncan Chard/Bloomberg

Reports coming from Abu Dhabi on Monday said four international banks have been selected as financial advisors for the potential merger of Aldar Properties and Sorouh Real Estate, state-backed property developers.

One of the sources familiar with the matter said the oil-rich emirate has hired Goldman Sachs and National Bank of Abu Dhabi to advise a steering committee that will oversee the potential merger.

Three banking and industry sources, speaking on condition of anonymity as the matter has not been made public, said Morgan Stanley and Credit Suisse are advising the companies. Spokesmen for Aldar and Sorouh declined to comment.

The state is contemplating a merger of indebted Aldar with Sorouh that could create a company worth some $15 billion in assets.

Aldar Properties and Sorouh Real Estate said they were discussing ways to merge under the blessings of the Abu Dhabi government. Aldar has twice been rescued by Abu Dhabi with bailouts totalling $10bn and recently got its rating upgraded from negative to positive by Moody’s Investors Service after posting a full-year net profit of $175m last year.

However, analysts believe a tie-up is going to be a complicated one, given the massive assets the two companies hold and the work involved in arriving at a deal structure.

The Abu Dhabi government has given massive handouts to Aldar over the past 18 months to shore up funding, spending more than $10 billion on the company, equivalent to the amount it deployed to rescue Dubai from a bond default in 2009.

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