Abu Dhabi Development Holding Company (ADQ) has agreed to acquire a 96% stake in Bank Audi’s loss-making Turkish subsidiary, Odeabank, as the United Arab Emirates deepens economic relations with Turkey. The deal, pending regulatory approvals by the Banking Regulation and Supervision Authority and the Competition Authority in Turkey, signals ADQ’s growing presence in banking markets.
Lebanon’s Bank Audi is the largest Odeabank shareholder, with a 76.4% stake. Other shareholders include the International Finance Corporation (IFC), FIG Investment Company and the European Bank for Reconstruction and Development, which have agreed to sell their interests. The financial details of the transaction have not been disclosed. The law firm Dechert is representing Bank Audi in the negotiations.
“As part of ADQ, Odeabank will have access to fresh capital, which will allow the company to unlock synergies with our wider portfolio,” Mansour AlMulla, deputy group CEO at ADQ, said in a prepared statement.
According to Bank Audi CEO Khalil El Debs, the deal will allow the bank to regroup and expand in select markets. “This transaction aligns well with Bank Audi Group’s present strategic focus on its home market as well as its presence in Europe,” he added.
In a September note, Fitch Ratings said it expected Odeabank to incur an operating loss this year and expected profitability to remain weak next year.
State-owned ADQ is nevertheless charged with expanding Abu Dhabi’s investment footprint across various sectors and markets. In 2022, it launched a $300 million fund with the Türkey Wealth Fund, which invests in companies developing emerging technologies or improving existing technologies in key sectors. But ADQ’s banking foray may not be without issues. In May, Fitch Ratings cautioned banks in the six-member Gulf Cooperation Council (GCC) about unchecked growth plans.
“International expansion provides higher diversification but can be a source of additional risks. In particular, foreign-exchange and interest-rate risks may be significant when entering a lower-rated jurisdiction with a more volatile macroeconomic backdrop.”
As a poll of economists showed earlier this month, Turkey’s economy is set to grow 3% this year and in 2025, lower than the government’s recently updated forecasts.
