ADNOC Distribution prices the largest Abu Dhabi IPO in 10 years

Offering has substantial overdemand from global institutional and retail investors

  

Dubai: State-owned energy giant Abu Dhabi National Oil Co (Adnoc) has said its offering is the largest on the Abu Dhabi stock exchange (ADX) in over 10 years.

Adnoc is listing 10 per cent of its fuel distribution business, pricing its initial public offering (IPO) at Dh2.50 at the mid-range price, according the company.

According to the oil company, this values its retail business at Dh31.1 billion, and will be the fourth largest stock on the ADX.

Marking the first time an ADX company has marketed an IPO using a book building process, Adnoc says this systematic process of generating and registering interest in a listing has led to substantial interest and engagement from high quality, global institutional investors.

A note from Adnoc, released on its website, stated that the IPO had “created a solid book build and offering,” and was “priced for a successful IPO of a landmark, highly attractive and unique Adnoc-owned business ... 90 per cent owned by one of the strongest and largest companies in the UAE.”

In turn, this has allowed for increased foreign direct investment (FDI) into the UAE, on top of the “significantly” high demand and interest from local retail investors, Adnoc said.

In a note from the oil firm, it said that “the offering was multiple times oversubscribed on the qualified investor tranche at a price of Dh2.50 per share,” adding that “the retail or individual investor tranche of the offering was oversubscribed by 22 times on the original retail tranche size.”

For UAE investors, the subscription period ended on Wednesday, while the institutional tranche closed its subscription period on Thursday.

Owing to this “exceptional level of oversubscription, it was decided to increase the retail tranche size to 10 per cent of the offering, allowing retail investors to further participate in this unique opportunity,” Adnoc added.

The company said that the strong value and investment story of Adnoc Distribution, alongside considerable local interest and demand, pointed to a healthy aftermarket.

Adnoc’s listing is the first IPO on the ADX in the last six years.

Sultan Ahmad Al Jaber, Adnoc Group CEO said in a separate statement: “We are pleased to announce today the offer price for shares in the landmark IPO of Adnoc Distribution, the largest IPO on the Abu Dhabi Securities Exchange in over a decade.”

“This important and strategic offering represents a unique opportunity for investors to own a stake in the UAE’s number one fuel retail brand, and largest network of retail convenience stores,” he added.

Value creation

Owning 90 per cent of the newly listed company, Adnoc said in its note that it was fully aligned with investors, and would enjoy any further upside on share price appreciation.

“This IPO represents the first IPO of an Adnoc company and creates a platform and route for further value creation,” the investor note said, adding: “The offering represents a further step in Adnoc’s new value creation strategy, as well as the more proactive management of its portfolio of assets and capital, to unlock value and drive growth.”

The value of ordinary shares sold in the offering totals Dh3.1 billion ($851 million), while final allocations were approximately 90 per cent for qualified investors (60 per cent local, 30 per cent international) and 10 per cent for individual and other investors.

On Wednesday, Reuters reported that Adnoc had cut the price range for its IPO, and will sell only a 10 per cent stake in the unit, valuing the potential deal at $900 million.

Bookrunners said Adnoc had revised the price range to between Dh2.35 a share and Dh2.65, compared to an earlier range of Dh2.35-2.95.

The value of ordinary shares sold in the offering totals Dh3.1 billion ($851 million), while final allocations were approximately 90 per cent for qualified investors (60 per cent local, 30 per cent international) and 10 per cent for individual and other investors.

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