Eshraq Investments' New Path: Prioritizing Direct Private Equity

Eshraq Investments, headquartered in Abu Dhabi, has announced a strategic shift aimed at transitioning away from its traditional portfolio towards a focus on direct private equity investments.

The company unveiled this new direction on Wednesday, revealing plans to bolster its capabilities in direct private equity and reduce reliance on its legacy holdings.

Under this new strategy, Eshraq will concentrate on building its direct private equity portfolio while also leveraging cash flow from minority equity stakes, fixed income assets, and real estate investments to diversify its holdings and ensure consistent earnings.

Despite its ambitions for change, Eshraq reported widened net losses in the first quarter of 2024, reaching AED 306.1 million ($83.3 million) compared to AED 34.1 million in the same period last year.

This significant loss was primarily attributed to a decrease in the value of the Goldilocks Fund, which suffered a decline of AED 400 million.

The company's share price has also experienced a downturn, plummeting by 33% year-to-date to AED 0.30, as indicated by data from the London Stock Exchange Group (LSEG).

In an effort to optimize its portfolio, Eshraq has been actively selling off real estate assets and exploring options to monetize its land holdings in recent months.

Furthermore, the company has managed to reduce its total liabilities in the first quarter of the year by 2% compared to the previous year, totaling AED 160.9 million.

This reduction is primarily attributed to Eshraq's ongoing efforts to deleverage its balance sheet, largely through decreased borrowings.

Source: Brinda Darasha / Zawya