• Transaction values Eshraq shares at 40.6 fils, a 37.8% premium to Monday’s closing price, demonstrating Eshraq’s robust intrinsic value
• The combined entity is expected to generate more than AED 100mn of income
• Non-cash transaction envisages acquisition of Goldilocks through issuance of new Eshraq shares
• The transaction will increase value creation for the combined entity through access to greater liquidity, diversification, and other synergy-related benefits
• Strategic investments in oil & gas, real estate and insurance sectors expected to act as a hedge against inflation in the coming years

Eshraq Investments PJSC ("Eshraq" or "Company"), listed on the Abu Dhabi Securities Exchange ("ADX"), announced today that its Board of Directors has agreed to acquire 100% shares of Goldilocks Investment Company Limited (“Goldilocks” or “Fund”).

 Goldilocks, the ADGM-domiciled investment fund is managed by SHUAA GMC Limited, a subsidiary of SHUAA Capital psc. The fund deploys an opportunistic long-term investment strategy, also known as constructive activism, and has generated a net return of 243% since inception* and 76% returns in 2021 through direct investments in equities and other undervalued and mispriced opportunities.  Goldilocks generated AED 105mn income in 2021 on the back of its investments in profitable and strong cash flow generating UAE-based companies.

Transaction Structure

Under the terms of the transaction, Eshraq will issue new shares to swapping Goldilocks investors in exchange for their shares in the Fund.  The transaction values Eshraq at 40.6 fils per share, a 37.8% premium to Eshraq’s closing price as of Monday, March 28, 2022. Post the acquisition transaction, Eshraq Investments will have combined assets of more than AED 3.8 billion (US$ 1.03 billion).

The non-cash transaction has received approvals from SCA and Eshraq’s Board of Directors. The transaction is subject to the approval of Eshraq's shareholders and other customary regulatory approvals and the satisfaction of conditions precedent.

Strategic Rationale

Goldilocks Fund:

• A strong track record of public and private investments in blue-chip growth companies across the GCC region which include Dana Gas, GFH Financial Group, SALAMA, Takaful Emarat, among others. The Fund is also an investor in successful private companies such as Anghami, Byju’s (India’s largest EdTech unicorn), SkyCell (Switzerland based PharmaTech company) and Stanford Marine Group, and an investor in public and private debt instruments.
• Portfolio companies have delivered solid performance and demonstrated strong business fundamentals and effective management.
• A total of 15 underlying investments with assets valued at AED 2.1 billion for the purpose of the transaction.

 Eshraq Investments:

• Reported a net profit of AED 38.4 million in 2021.
• Realized an operating income of AED 26.2 million, up 45% from 2020, led by outperforming leasing and hospitality businesses.
• Generated a profit of AED 46.1 million from its financial and technology investments, driven by strong performance of the company's equities and fixed income portfolio and a 44% year-on-year increase in dividend income.

Given that a substantial majority of the combined portfolio is expected to generate dividend and finance income, the proposed transaction will provide the combined shareholders access to a diversified income portfolio as well as future upside opportunities.

The Board of Directors at Eshraq Investments, commented: “The proposed transaction is a win-win for both Eshraq and Goldilocks shareholders, particularly in terms of investment portfolio diversification and increased liquidity. Most importantly, the acquisition of a high-performing fund like Goldilocks will enable Eshraq to increase its profitability, improve its share price and positions the company for strong business performance, while creating tangible and long-term sustainable value for Eshraq shareholders. We also expect the transaction to give us access to profitable deal flow at an early stage.”

A circular containing further information will be sent to Eshraq shareholders no later than 15 days prior to the date of the general meeting at which Eshraq shareholders are to vote on the transaction. For further details, please visit www.eshraquae.com.

Advisors 

EY, Baker Botts and CBRE are acting as the financial advisor, legal advisor, and real estate valuation advisor to Eshraq, respectively. PwC and White & Case are acting as the financial due diligence and legal advisor to Goldilocks, respectively. KPMG is acting as independent valuer for the transaction.

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