Sovereign wealth fund ADQ has inked a USD 35 bn agreement to develop Ras El Hekma on Egypt’s North Coast, according to separate statements from the Egyptian cabinet and ADQ (pdf). This marks the “largest direct investment agreement in Egypt,” Egyptian Prime Minister Moustafa Madbouly said.

IN CONTEXT- The funds will help Egypt plug its FX and financing gaps, and set it up for a devaluation of its currency — which is a major prerequisite for the country to secure a financing package from the IMF. The UAE has been among Egypt’s biggest lenders since Russia’s war in Ukraine impacted state coffers in 2022, with ADQ used as the main vehicle to drive foreign direct investments into the country.

THE FINANCES-

ADQ is paying USD 24 bn for the development rights to Ras El Hekma and will convert some USD 11 bn worth of UAE deposits at the Central Bank of Egypt into money that it will “invest … in real estate and other prime projects,” the fund said in its press release.

To put that into perspective: The agreement is worth 3.5x the value of all foreign investment Egypt attracted last year.

ADQ will provide USD 10 bn in fresh capital within a week and another USD 14 bn within two months. It is also converting USD 11 bn worth of deposits at the Central Bank of Egypt that it will use to invest in real estate and other projects.

ADQ thinks Ras El Hekma will attract investment worth c. USD 150 bn as it is built out, and it looks like that could be just in phase one. Egypt’s New Urban Communities Authority Vice Chairman Walid Abbas told talk show host Ahmed Moussa (watch, runtime: 40:34) that investment is likely to top USD 500 bn over 15 years and three phases.

PROJECT DETAILS-

A next-generation city: A 170-mn sqm stretch of prime coastal land will be transformed into a “next-generation city,” housing tourism, urban, commercial, and recreational spaces, alongside a freezone and an investment zone. The area will also feature a marina for yachts and will have an airport nearby.

ADQ “aims to unlock the appeal of Ras El-Hekma as a premium international financial and tourism destination, adopting the latest cutting edge digital and technological smart city solutions,” it said. The city could be a game-changer for Egypt’s North Coast, extending more than 50km along the sea and transforming the area into a year-round residential, tourism, and business hub. The project is expected to attract 8 mn additional tourists into the country every year when it is up and running.

The timeline: ADQ will break ground on the project in early 2025. Phase one will take about five years to complete.

Who will carry out the development? ADQ will set up an Egyptian joint stock company named Ras El Hekma to handle the project’s development. Egypt’s Talaat Moustafa Group (TMG) will also “collaborate” with Abu Dhabi wealth fund ADQ and the Emirati real estate developer Modon Properties on the project, the Egyptian real estate developer said in an EGX disclosure (pdf), without providing any further details.

More developers will join: The project is too big to be carried out by just a single developer, so a group of developers will be contracted to help out with the development, Egypt’s New Urban Communities Authority Vice Chairman Walid Abbas told Al Arabiya (watch, runtime: 6:31).

ICYMI- TMG and ADQ have done business with each other before: TMG sold a 40.5% stake in subsidiary Icon Investments to ADQ and its subsidiary Adnec Group last month reportedly for USD 882.5 mn, helping it secure the remaining funds to up its stake in the government’s Legacy Hospitality — a group of seven historic hotels in Egypt.

ADVISORS- Baker McKenzie provided counsel for the Egyptian government, while Matouk Bassiouny & Hennawy was the advisor to ADQ, according to Al Borsa.

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