Adnoc, Borealis seek $2bn from IPO of plastics JV

Abu Dhabi National Oil company (ADNOC) and Borealis AG are seeking to raise about $2bn from an initial public offering of their plastics joint venture, according to people familiar with the matter.

The state-owned energy company and Austrian chemicals producer plan to sell a 10 per cent stake in their Borouge plastics unit by the end of the quarter, the people said, declining to be identified as the information is private. The sale would value Borouge at about $20bn and could be announced as early as next month, they said.

Discussions are ongoing and no final decisions on the timeframe have been taken, the people said. A representative for Adnoc declined to comment, while a spokesperson for Borealis said the firms are considering options for Borouge, including an IPO, and will update the market when appropriate.

Earlier this month, Dubai’s main utility raised $6.1bn in the world’s second-biggest initial public offering this year.

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Oil surged to a seven-year high after the Ukrainian crisis and prices remain at over $100 a barrel, boosting Gulf economies and bolstering earnings for companies in the energy industry. Regional chemicals and plastics producers like Borouge and Fertiglobe that can tap lower-cost natural gas have also been able to gain an advantage over competitors as commodity supplies tighten and costs surge.

The UAE and neighbouring Saudi Arabia have unleashed a flurry of IPOs over the last two years, raising about $20bn since the start of 2020. The region’s biggest economies are using their vast oil wealth to attract investment and plow funds into industries including technology, tourism and manufacturing.

Saudi Arabia is the largest producer in the Organization of Petroleum Exporting Countries and the UAE is third, behind Iraq.

Abu Dhabi, which pumps most of the UAE’s oil, sold stakes in two units last year. It raised $1.1bn by listing Adnoc Drilling company and $795m from the sale of shares in its Fertiglobe unit, which is a joint venture with Dutch chemical firm OCI NV.

Adnoc owns Borouge along with Borealis, which is itself owned by Austrian refiner OMV AG and Abu Dhabi’s Mubadala Investment company.

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.

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