The Abu Dhabi-based Fertiglobe looks set to raise as much as $827 million in its initial public offering (IPO).

The joint venture between Dutch chemical producer OCI and state energy company ADNOC, has set the offer price range at between AED2.45 to AED2.65 ($0.66 to 0.72) implying an equity valuation of $5.5 billion to $6 billion.

The final offer price is expected to be announced on 20 October 2021. The shares will be listed for trading on Abu Dhabi Securities Market (ADX) on 27 October 2021, the fertilizer company said in a statement. 

The subscription period for the IPO opens today and will continue until 18 October for the first tranche offered to retail investors, and until 19 October for the second tranche offered to qualified institutional and other investors in the UAE and elsewhere.

The company expects to raise approximately $765 million to $827 million.

Meanwhile, Fertiglobe has entered into cornerstone investment agreements with three funds. US-based Inclusive Capital Partners, Abu Dhabi Pension Fund and GIC Private Limited, Singapore’s Sovereign Wealth Fund will become cornerstone investors in the IPO with a combined investment of approximately $231 million.

In addition, the founder and managing partner of Inclusive Capital Partners, Jeffrey Uben, will be appointed as an independent member of Fertiglobe’s board of directors.

Sultan Al Jaber, Minister of Industry and Advanced Technology and managing director and group CEO of ADNOC said the IPO has seen strong investor interest.

Dividend outlook

Fertiglobe said it expects to distribute a dividend of at least $200 million (increased from the previous guidance of at least $150 million) to be paid in April 2022 for the second half of the year ended 31 December 2021.

For full-year 2022, Fertiglobe expects to pay a dividend of at least $400 million (increased from the previous guidance of at least $315 million), with 50 percent of that dividend paid in October 2022 and 50 percent paid in April 2023.

Fertiglobe's IPO will be the third time ADNOC has sold a stake in its subsidiaries.

Following the IPO, OCI, which is backed by Egyptian businessman Nassef Sawiris, is expected to indirectly continue to own a majority of Fertiglobe’s share capital, while ADNOC will indirectly own at least 36.2 percent. ADNOC currently holds a 42 percent stake in the fertilizer unit, while OCI holds 58 percent.

Citigroup Global Markets Ltdm, First Abu Dhabi Bank PJSC, HSBC Bank Middle East Ltd., and Morgan Stanley & Co. International plc have been appointed as joint global coordinators. EFG-Hermes UAE Limited, Goldman Sachs International and International Securities L.L.C are the joint bookrunners.

Fertiglobe is one of the world’s largest seaborne exporter of urea and ammonia combined. It is also an early mover in clean ammonia. In June 2021, Fertiglobe joined a project by ADNOC and sovereign wealth fund ADQ to develop a one million tons per year blue ammonia facility in Ruwais, Abu Dhabi.

(Reporting by Brinda Darasha; editing by Seban Scaria)

brinda.darasha@refinitiv.com

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