The UAE’s Abu Dhabi National Oil Co. (ADNOC) said it has completed the placement to institutional investors of 880 million shares in ADNOC Drilling Company PJSC, raising AED 3.43 billion ($935 million).

This represents 5.5% of ADNOC Drilling’s total issued and outstanding share capital, and will increase its free float to 16.5%.

The Abu Dhabi based energy major said on Wednesday it will offer the shares of the driller via a bookbuild offering in a move that it said would help raise liquidity and widen its shareholding

The offering was priced at AED 3.90 per share, approximately 70% above IPO price of AED 2.30 per share, and represents a 5.6% discount to the driller's closing price on May 22, 2024, ADNOC said in a statement.

ADNOC will continue to retain a majority 78.5% shareholding in the company and has also agreed to a restriction from selling further shares for a period of six months from closing of the offering, subject to customary carve outs.

Settlement of the offering is expected to occur on or around May 28, 2024.

ADNOC's secondary offering marks the first test of the UAE's strategy to broaden equity market participation and improve liquidity, said Oliver Connor, Vice President, Natural Resources & Climate Energy Technology at Citigroup Global Markets in a note.

"Whilst we acknowledge the risk of near term pressure from this announcement, the investment thesis continues to look attractive with growing distributions... and headroom for more as FCFY (free cash flow yield) moves to 10% - sitting alongside an expanding domestic opportunity set."

(Reporting by Brinda Darasha; editing by Mily Chakrabarty)