Abu Dhabi’s Adnoc seeks up to RM8.2b with IPO of unit

Dubai • Abu Dhabi National Oil Co (Adnoc) may raise US$2 billion (RM8.22 billion) from the initial public offering (IPO) of its fuel-retailing unit in an offering that could be the biggest in the United Arab Emirates (UAE) in 10 years.

The crude producer will price the shares of Adnoc for Distribution PJSC in a range of 2.35 dirhams (RM2.63) to 2.95 dirhams, according to an advertisement published in Gulf News. Based on that estimate, the unit is valued at US$8 billion to US$10 billion.

IPO activity in the UAE is showing signs of picking up after only two deals were completed throughout 2015 and 2016. Emaar Properties PJSC raised US$1.3 billion from the sale of shares in its development unit earlier this month, while Mubadala Investment Co expects to IPO its Emirates Global Aluminium unit next year.

“This is the first real petroleum-linked issue that has come to the market. That’s huge given that really this region is all about oil,” Salman Bajwa, the CEO of Emirates NBD Asset Management, said in a Bloomberg TV interview yesterday. “The appetite that we have seen among investors, among the retail investors as well as institutions, is huge.”

Raising US$2 billion would make the Adnoc Distribution share sale the biggest in the UAE since Dubai ports operator DP World Ltd raised US$5 billion in 2007, according to data compiled by Bloomberg.

Adnoc, which pumps most of the crude in the UAE, plans to announce the final offer size and pricing on Dec 8, with the stock expected to begin trading on Dec 13 in Abu Dhabi. The final amount could be more in the US$1 billion- to-US$1.5 billion range, according to a person with knowledge of the matter. The company said last week it plans to offer 1.25 billion to 2.5 billion shares.

Adnoc Distribution reported profit of 1.31 billion dirhams for the first nine months of this year, compared to 1.32 billion dirhams a year ago, according to the listing announcement. It secured a US$2.25 billion loan from a group of banks this month, according to the statement.

Share sales are set to pick up across the Middle East as oil- rich Gulf governments sell assets to raise cash to diversify their economies after crude prices slumped. The biggest of those is the planned IPO of Saudi Aramco that is set for next year and could be the largest globally.

Earlier this month, 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 deal said. The shares fell 4.3% on the first day of trading, the worst debut since 2014 among the 10 biggest IPOs in the Middle East and Africa over that time span, Bloomberg data show.

Adnoc will try to sell stakes in some units and seek partners for others, CEO Sultan Al Jaber said in an interview this month. The company, which raised US$3 billion in bonds last month, is putting chunks of separate operating units up for sale instead of selling a piece of the parent company.

The IPO will be coordinated by Citigroup Inc, First Abu Dhabi Bank PJSC, HSBC Bank Plc and Merrill Lynch International. EFG-Hermes UAE Ltd, Goldman Sachs Group Inc and Morgan Stanley are acting as joint bookrunners for the offering. Rothschild & Co is the sole financial advisor to Adnoc and Adnoc Distribution. — Bloomberg