Adnoc unit’s US$607 million Abu Dhabi IPO sells out in minutes
THE initial public offering (IPO) of Abu Dhabi National Oil (Adnoc) Logistics & Services got enough orders to cover all shares within minutes, showing continued strong demand for listings in the Middle East.
Adnoc is selling about 1.11 billion shares in its maritime logistics unit at 1.99 dirhams (S$0.72) to 2.01 dirhams each, valuing the company at as much as US$4.05 billion, according to a statement on Tuesday (May 15).
Order books for the IPO, which could raise as much as US$607 million at the top end, were covered throughout the range and indicated demand exceeded deal size, according to a message to investors seen by Bloomberg News.
Al Seer Marine Supplies & Equipment, National Marine Dredging, Alpha Oryx – ultimately owned by Abu Dhabi wealth fund ADQ – and Abu Dhabi Pension Fund have committed to become cornerstone investors and subscribed for about US$180 million combined.
The deal is the second listing of a unit by state-owned Adnoc this year, after it raised US$2.5 billion in the IPO of its gas business in March. It’s also set to be the second-biggest IPO in the Middle East so far this year.
Proceeds from initial public offerings in the Middle East have dropped 69 per cent from the same period a year ago and stand at US$3.5 billion, according to data compiled by Bloomberg. Lower oil prices and concerns about slower economic growth globally have weighed on the market, and the MSCI GCC Countries Index has fallen almost 17 per cent in the past year.
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Still, the Middle East is faring a lot better than other regions like Europe, where IPOs are still struggling to get off the ground. Abu Dhabi has so far dominated listing activity in the Gulf, mainly thanks to Adnoc Gas’s IPO, while Saudi Arabia has been quiet and Dubai has not seen any of the large privatisations that made it busy last year.
Adnoc has been selling stakes in its units since about 2017 as part of a strategy to help fund the diversification of the economy and reduce its reliance on fossil fuels. It listed chemicals firm Borouge last year and has previously sold shares in its drilling unit and fertiliser company Fertiglobe, among others.
Adnoc L&S plans to pay an annualised 2023 cash dividend of US$260 million and expects to increase this by at least 5 per cent annually. The firm, which has been expanding its fleet to cope with increased demand from the state-owned firm’s businesses, is targeting capital expenditure of US$4 billion to US$5 billion in the medium term.
It’s also planning a compound annual growth rate of at least 10 per cent for its revenues in the mid-term.
The institutional bookbuilding period runs until May 24, with pricing set for May 25. The retail offering will close on May 23 while the shares are expected to start trading on Jun 1.
Citigroup, First Abu Dhabi Bank, HSBC Holdings and JPMorgan Chase have been appointed as joint global coordinators and joint bookrunners. Abu Dhabi Commercial Bank, Arqaam Capital Limited, Credit Agricole, EFG-Hermes, International Securities and Societe Generale are joint bookrunners for the offering.
Moelis is the independent financial adviser. BLOOMBERG
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