Abu Dhabi Investment House (ADIH) expects a total internal rate of return (IRR) of 21.75 per cent on its Lagoon fund, beating initial targets set by the company.
As ADIH prepares to exit the fund, the firm said it anticipated the total IRR to be higher than the initial projected IRR of 20 per cent. The IRR, if achieved, would translate into a total return on investment (ROI) of 30 per cent, 2.5 per cent more than the expected ROI of 27.5 per cent.
Private equity funds use IRR as a benchmark rate at which a certain amount of capital today would have to be invested in order to grow to a specific value at a time in the future.
ADIH’s Lagoon fund, which was launched in June 2006 to finance the Lagoon project, raised $42 million in equity. The 30 per cent total return of the project amounts to $12.6m over the fund’s life of 16 months.
“When we first launched the fund, we witnessed substantial over-subscription and were confident that the investment would yield strong returns,” Rashad Janahi, CEO, ADIH, said. Janahi said ADIH was committed to structuring and exiting top-quality deals with long-term impact.
The Lagoon is a $90m commercial and retail property development at Bahrain’s Amwaj Islands. It is due to open at the end of the first quarter of this year.
Lagoon fund to exceed its target