© Pavel Nadelyayev
Abu Dhabi sovereign investor L’Imad Holding’s reported interest in taking a stake in Atlas Air Worldwide could offer the US freighter operator’s owners something almost as valuable as a sale: validation of its ambitious valuation.
Bloomberg has reported that L’Imad is considering a bid for a stake in Atlas, in a transaction that could value the company at $10bn or more. Discussions are said to be at an early stage and may not result in an offer.
But the numbers are interesting. Apollo Global Management and its investment partners acquired Atlas in 2023 at an enterprise value of around $5.2bn. Reports emerged late last year that Apollo was considering selling the business, at a possible valuation of more than $12bn including debt, which certainly raised eyebrows.
And Atlas CEO Miachel Steen told The Loadstar earlier this year that “we may see changes in our ownership structure”.
Something looks likely to happen, but finding a buyer for the entire company at anything approaching that price would be no small task. Selling a minority stake at a valuation of $10bn or more, however, could be a rather different proposition.
It would allow Atlas’s owners to realise some of the considerable increase in the company’s value while retaining control and exposure to further growth. Just as importantly, an outside investor prepared to put substantial capital into Atlas at something close to that valuation would establish a useful external benchmark for the business.
That could prove valuable in any subsequent refinancing, further stake sale or eventual exit.
And L’Imad is not an entirely surprising candidate.
The Abu Dhabi government consolidated L’Imad and ADQ’s assets under the L’Imad umbrella earlier this year, creating a group encompassing 25 investment companies and platforms and more than 250 subsidiaries.
Its holdings include Etihad Airways, Etihad Rail and AD Ports, alongside businesses including TAQA, PureHealth, Modon, McLaren and Louis Dreyfus.
Transport and logistics are clearly part of its ambitions. L’Imad’s investment framework identifies both aviation and ports among its strategic sectors, while the group describes itself as an active investor and shareholder seeking to build and scale its portfolio companies.
L’Imad is also seeking to increase its exposure to AD Ports, having launched an offer through ADQ in August to acquire the shares it did not already own.
Against that backdrop, an investment in one of the world’s largest providers of outsourced freighter capacity would not look particularly out of place.
There is also a connection with Etihad – Etihad Cargo and Atlas have worked together since 2012, and last year signed a new long-term agreement under which Atlas operates a dedicated 777 freighter for the Abu Dhabi carrier. There is also a notable personnel connection: Atlas chief strategy and transformation officer Martin Drew previously ran Etihad Cargo.
The Atlas aircraft was added as Etihad sought more main-deck capacity ahead of the arrival of its new-generation freighters. It currently has five of its own 777Fs and has ordered 10 A350Fs as it looks to expand its dedicated cargo operation.
There is no suggestion that L’Imad’s reported interest in Atlas is driven by Etihad’s requirements. But Atlas would at least be a familiar business: one already providing strategic freighter capacity to one of L’Imad’s major aviation holdings.
A minority transaction also makes sense because Atlas is a US airline. Foreign ownership and control restrictions limit what overseas strategic investors can do, considerably reducing the pool of potential outright buyers. A minority investment opens the door to sovereign funds and international transport and logistics groups that could not simply acquire control of the airline.
Meanwhile, Atlas itself continues to expand. It last month completed its acquisition of 49% of Air Atlanta, giving it access to the Icelandic ACMI operator’s Icelandic and Maltese operating platforms, while subsidiary Titan Aviation is separately acquiring Air Atlanta’s owned aircraft.
So Apollo and its partners face an interesting choice. They could seek an outright buyer capable of swallowing Atlas at a valuation roughly twice that paid just three years ago. Or they could sell a slice of it, return some capital and retain most of their exposure to a business they evidently believe is worth considerably more than they paid.
If L’Imad was ultimately prepared to invest at anything approaching the $10bn-plus valuation being discussed, it may suddenly look rather attractive to Apollo and friends.