The United Arab Emirate’s main oil company has increased the size of the initial public offering of its gas business — already set to be the world’s largest so far this year — by a quarter to as much as $2.5 billion.
(Bloomberg) —
The United Arab Emirate’s main oil company has increased the size of the initial public offering of its gas business — already set to be the world’s largest so far this year — by a quarter to as much as $2.5 billion.
The move comes after investors snapped up all available shares within hours of them going on sale last week. Abu Dhabi National Oil Co. will now offer 3.84 billion shares, or a stake of about 5%, in Adnoc Gas in the IPO, according to a statement on Monday. It was previously looking to sell 4%.
The price range remains unchanged at 2.25 dirhams ($0.61) to 2.43 dirhams per share, valuing the company at as much as $50.8 billion. The retail offering was boosted to 12% of the total deal while the employee tranche was increased to 4%.
There has been “significant investor demand across all tranches,” Adnoc Gas said. The Middle East had experienced increased investor interest last year on the back of its IPO boom which bucked a global slowdown and a surge in energy prices following Russia’s invasion of Ukraine.
The units merged to create Adnoc Gas reported record underlying earnings of $8.7 billion in the year through October as gas prices soared when the war began.
The IPO is set to be the biggest-ever in Abu Dhabi, surpassing chemicals firm Borouge’s $2 billion deal in mid-2022. It’s the latest in a series of stock sales in the Persian Gulf as governments seek to fund a transition away from fossil fuels and bring more international investors into their markets.
Adnoc Gas is taking orders from retail investors until March 1 and from institutional traders until a day later, with a final pricing announcement on March 3. Trading is expected to start on March 13.
The IPO has been operating on an accelerated timeline, with Adnoc only announcing the listing in late November and formally creating the gas unit at the beginning of this year. The tight schedule led to Goldman Sachs Group Inc. and Bank of America Corp. dropping off the deal, Bloomberg News reported.
Prior to the IPO, Adnoc transferred 5% of Adnoc Gas to Taqa, a state-controlled power producer in Abu Dhabi.
Adnoc Gas expects to pay dividends of $3.25 billion for 2023. It has a production 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).
First Abu Dhabi Bank PJSC and HSBC Holdings Plc are the lead banks on the IPO. Abu Dhabi Commercial Bank PJSC, Arqaam Capital Limited, BNP Paribas, Deutsche Bank AG, EFG-Hermes and International Securities are joint bookrunners. Moelis & Co. is the independent financial adviser.
(Updates throughout with details, background)
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