The United Arab Emirates’ national oil company plans to sell a stake of about 4% in its natural-gas business through what could be one of Abu Dhabi’s biggest initial public offerings ever.
(Bloomberg) — The United Arab Emirates’ national oil company plans to sell a stake of about 4% in its natural-gas business through what could be one of Abu Dhabi’s biggest initial public offerings ever.
Abu Dhabi National Oil Co. will offer 3.07 billion shares in Adnoc Gas, formed at the start of the year through a merger of liquefied natural gas and gas-processing arms. The IPO will start on Feb. 23 and the final offer price will be on March 3, with trading slated to start 10 days later.
Adnoc Gas made record adjusted underlying earnings of $8.7 billion in the year through October 2022, as global gas prices soared after Russia invaded Ukraine and Europe rushed to secure supplies from other countries.
The unit expects to pay dividends of $3.25 billion for 2023.
Prior to the offering, Adnoc transferred 5% of Adnoc Gas to Abu Dhabi-based Taqa, the biggest power producer in the UAE.
The IPO is part of a drive by energy-rich Persian Gulf nations to fund the diversification of their economies and open their stock markets more to international investors. High oil and gas prices helped the region — especially the UAE and Saudi Arabia — buck a global IPO slump last year, and more listings are expected in the coming months.
Oman plans to raise as much as $244 million from the IPO of a state oil-drilling unit, Abraj Energy. The offer starts on Monday, three day ahead of Adnoc Gas.
Adnoc Gas’s deal is running on an accelerated timeline. Adnoc only announced the listing at the end of November. The tight schedule led to two of the banks that had been working on the offering — Goldman Sachs Group Inc. and Bank of America Corp. — dropping off, Bloomberg News reported.
The deal is the first major IPO in the Middle East this year after a blistering 2022, which saw just under $23 billion raised. First Abu Dhabi Bank PJSC and HSBC Holdings Plc are the lead banks.
LNG Push
Adnoc Gas has a capacity of 10 billion cubic feet a day across eight onshore and offshore sites and a pipeline network of more than 3,250 kilometers (2,020 miles).
It will be at the forefront of the UAE’s push to boost production and trading of LNG. Demand for gas — used largely for power plants and heating — is expected to stay strong for at least the next several years. The global market is tight as Europe tries to replace flows from Russia, the source of 40% of its supplies before the Ukrainian invasion.
The UAE is building an LNG plant at the port city of Fujairah to almost triple its export capacity to around 15 million tons a year. That may make it one of the world’s ten biggest exporters of the fuel.
While Adnoc Gas doesn’t own the Fujairah LNG project, it expects to be given the chance to buy it from Adnoc before it starts commercial production, according to the prospectus.
Adnoc Gas said it plans growth capital expenditure of $14 billion over the next seven years, most of which will be funded by debt.
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