Adnoc to raise $843m from fuel distribution unit IPO
OIL AND GAS NEWS
Abu Dhabi National Oil Company's (Adnoc) fuel distribution unit has priced its initial public offering (IPO) at Dh3.1 billion ($843 million) after lowering the top end of the offer price and deciding to only sell a 10 per cent stake.
The crude producer reduced the price range to Dh2.35 to Dh2.65 for the shares of Abu Dhabi National Oil Company for Distribution (Adnoc Distribution), according to terms seen by Bloomberg News.
The initial price range was Dh2.35 to Dh2.95. The company initially planned to sell as much as 20 per cent.
The offering is covered throughout the revised price range, according to the document.
Adnoc, which pumps most of the crude in the UAE, expects the stock to begin trading on December 13 in Abu Dhabi. The shares would be priced to give investors “a successful after-market performance,” John Carey, Adnoc Distribution’s deputy chief executive told Bloomberg last week.
IPO activity in the UAE is picking up after only two deals were completed in 2015 and 2016.
Emaar Properties PJSC raised $1.3 billion from the sale of shares in its development unit last month, while Mubadala Investment Company expects to IPO its Emirates Global Aluminium unit next year, said the Bloomberg report.
Emaar Development PJSC struggled to complete its offering as a crackdown on corruption in Saudi Arabia hurt market sentiment and led investors to pull orders, people familiar with that deal said.
The new price range makes the share sale a better deal for investors and increases the chances of the stock rising when it begins trading, Mohammed Ali Yasin, chief executive officer of NBAD Securities LLC said by phone.
“There has been strong demand for shares from local investors and I think at this price range long-term investors will be rewarded,” he said.
The listing of Adnoc Distribution will the first IPO on the Abu Dhabi Exchange since National Takaful Co. Watania PJSC sold shares in 2012 and the biggest listing on the stock market for the past 10 years, according to data compiled by Bloomberg.
Adnoc, which raised $3 billion from bond sales in October, will try to sell stakes in some units and seek partners for others, CEO Sultan Al Jaber said in an interview last month.
Adnoc Distribution reported a profit of Dh1.31 billion for the first nine months of this year, about the same as a year ago, according to the listing announcement. It secured a $2.25 billion loan from a group of banks in November.
The Adnoc Distribution IPO is being coordinated by Citigroup, First Abu Dhabi Bank, HSBC Bank and Merrill Lynch International.
EFG-Hermes UAE, Goldman Sachs Group and Morgan Stanley are acting as joint bookrunners for the offering. Rothschild & Co. is the sole financial adviser to Adnoc and Adnoc Distribution.
