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AlwaysFree: Adnoc Unit’s $607 Million Abu Dhabi IPO Sells Out in Minutes

Author: SSESSMENTS

  • Adnoc L&S price range set at 1.99 dirhams to 2.01 dirhams/shr
  • Deal will be the second-biggest IPO in the mideast this year

According to Bloomberg article published on May 16, 2023, the initial public offering of Adnoc Logistics & Services got enough orders to cover all shares within minutes, showing continued strong demand for listings in the Middle East.

Abu Dhabi National Oil Co. is selling about 1.11 billion shares in its maritime logistics unit at 1.99 dirhams ($0.54) to 2.01 dirhams each, valuing the company at as much as $4.05 billion, according to a statement Tuesday. 

Order books for the IPO, which could raise as much as $607 million at the top end, were covered throughout the range and indicated demand exceeded deal size, according to a message to investors seen by Bloomberg News.

Al Seer Marine Supplies & Equipment Co PJSC, National Marine Dredging Co PJSC, Alpha Oryx Ltd. —  ultimately owned by Abu Dhabi wealth fund ADQ — and Abu Dhabi Pension Fund have committed to become cornerstone investors and subscribed for about $180 million combined.

The deal is the second listing of a unit by state-owned Adnoc this year, after it raised $2.5 billion in the IPO of its gas business in March. It’s also set to be the second-biggest IPO in the Middle East so far this year.

Proceeds from initial public offerings in the Middle East have dropped 69% from the same period a year ago and stand at $3.5 billion, according to data compiled by Bloomberg. Lower oil prices and concerns about slower economic growth globally have weighed on the market, and the MSCI GCC Countries Index has fallen almost 17% in the past year.

Still, the Middle East is faring a lot better than other regions like Europe, where IPOs are still struggling to get off the ground. Abu Dhabi has so far dominated listing activity in the Gulf, mainly thanks to Adnoc Gas’s IPO, while Saudi Arabia has been quiet and Dubai has not seen any of the large privatizations that made it busy last year.

Adnoc has been selling stakes in its units since about 2017 as part of a strategy to help fund the diversification of the economy and reduce its reliance on fossil fuels. It listed chemicals firm Borouge last year and has previously sold shares in its drilling unit and fertilizer company Fertiglobe, among others.

Adnoc L&S plans to pay an annualized 2023 cash dividend of $260 million and expects to increase this by at least 5% annually. The firm, which has been expanding its fleet to cope with increased demand from the state-owned firm’s businesses, is targeting capital expenditure of $4 billion to $5 billion in the medium term.

It’s also planning a compound annual growth rate of at least 10% for its revenues in the mid-term.

The institutional bookbuilding period runs until May 24, with pricing set for May 25. The retail offering will close on May 23 while the shares are expected to start trading on June 1.

Citigroup Inc, First Abu Dhabi Bank PJSC, HSBC Holdings Plc and JPMorgan Chase & Co. have been appointed as joint global coordinators and joint bookrunners. Abu Dhabi Commercial Bank PJSC, Arqaam Capital Limited, Credit Agricole SA, EFG-Hermes, International Securities and Societe Generale SA are joint bookrunners for the offering.

Moelis & Co. is the independent financial adviser.

Tags: All Products,AlwaysFree,Crude Oil,English,Middle East,UAE

Published on May 17, 2023 10:27 AM (GMT+8)
Last Updated on May 17, 2023 10:27 AM (GMT+8)