ADNOC, Borealis hiring banks for IPO of plastics joint venture

The largest oil producer in the UAE and its Austrian chemicals partner are lining up banks to help arrange a potential listing of their plastics venture Borouge within months, according to people familiar with the matter.

Abu Dhabi National Oil Company and Borealis said on Tuesday they’re considering an initial public offering of a minority stake in the business. They hired First Abu Dhabi Bank and an international lender for the IPO, the people said, asking not to be identified discussing confidential information.

The companies will appoint more banks for a listing that could come as early as mid-year, though timing could shift, the people said.

ADNOC and Borealis are separately arranging $2.75bn in financing from international banks to help fund a $6.2bn expansion to add a fourth production line at Borouge’s facility in Abu Dhabi, according to people with knowledge of the transaction.

Deliberations are ongoing and no final decisions on the timeframe have been taken, they said. Representatives for ADNOC and Borealis declined to comment on Borouge’s borrowing plans. First Abu Dhabi Bank didn’t immediately respond to a request for comment.

Founded in the late 1990s, Borouge manufactures plastics used in everything from automobiles and food packaging to medicine vials and piping systems. Its main plant is in Abu Dhabi. The company employs more than 3,000 people and serves customers across the Middle East, Africa and Asia.

It paid about EUR1.2bn ($1.4bn) of dividends in 2020 and about EUR1.5bn in 2019, according to the annual report of Borealis. The plastic maker’s income dropped around 10 per cent to EUR833m in 2020.

IPO Pipeline

OPEC’s third-biggest producer is pushing ahead with plans to list more businesses and raise funds for expansion by using its natural resources to attract investors and broaden capital markets.

ADNOC already raised about $1.9bn by listing two subsidiaries last year. The state company, which pumps almost all the oil and natural gas in the UAE, is also considering options, including a potential listing, for its transport unit ADNOC Logistics & Shipping as early as this year, according to people familiar with the matter.

ADNOC declined to comment on a potential listing for the logistics unit.

Despite volatility in global markets, the Middle East has remained a bright spot for IPOs, with some of the world’s top lenders seeing continued demand for listings in the region. Satellite operator Yahsat kicked off the frenzy in Abu Dhabi last July, when it staged the first listing on the local exchange in nearly four years.

ADNOC also plans to sell its first bonds this year to refinance liabilities and help expand the country’s debt markets by giving investors access to returns linked to oil sales. The state company has additionally listed its retail unit and sold stakes in assets from pipelines to property.

Oil boost
Oil prices near the highest in seven years – and closing in on $100 a barrel – are boosting earnings for companies that serve the energy industry or tap lower-cost hydrocarbons to gain an advantage over rivals.

The region’s biggest economies — Saudi Arabia and the UAE — are meanwhile leaning on their oil profits to spur investment in industries from manufacturing to healthcare as part of an effort to support growth after the global energy transition cuts demand for crude and natural gas.

A wave of UAE listings is now set to reach Dubai, whose government said it aims to sell shares in 10 state-owned companies.