ADNOC raises size of its logistics unit IPO on heavy demand
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ADNOC raises size of its logistics unit IPO on heavy demand

ADNOC raises size of its logistics unit IPO on heavy demand

The maritime logistics firm expects the final offer price to be announced on May 26, after the book-building process


ADNOC Group has raised the size of its logistics unit’s initial public offering (IPO) to 19 per cent due to “significant investor demand” in what is set to be the second-biggest listing in the Middle East this year, after the $2.5bn IPO of the energy firm’s gas business in March.

The state-owned energy company initially planned to raise $607m (Dhs2.23bn) by offering a 15 per cent stake in ADNOC Logistics & Services (ADNOC L&S). ADNOC said that it had increased the number of ordinary shares offered in the IPO of its maritime logistics unit to 1.41 billion, constituting a 19 per cent stake, at Dhs1.99 to Dhs2.01 apiece to raise Dhs2.83bn at the top of the range.

“We are delighted to announce that we will be increasing the offered size for the ADNOC L&S IPO, which is set to be the second-largest market debut so far this year in the Middle East region, marking another remarkable accomplishment for ADNOC in its ongoing value creation programme,” said Khaled Al Zaabi, Group CFO of ADNOC.

Al Zaabi said the IPO had received exceptional demand across all tranches, with significant interest across the local, regional and global investment community. ADNOC L&S’s IPO is expected to be the next landmark listing in Abu Dhabi cementing the energy group’s position as the key catalyst to attract foreign direct investment while bolstering the local financial equity market.

ADNOC L&S said the subscription period for the offering remains unchanged. The company is offering the shares in two tranches — institutional investors and retail investors— between May 16 and May 24, with an expected trading debut on the Abu Dhabi Securities Exchange on June 1, 2023.

The maritime logistics firm expects the final offer price to be announced on May 26, after the book-building process.

ADNOC L&S’s IPO drew in four cornerstone investors including Al Seer Marine Supplies & Equipment Company, National Marine Dredging Company, Alpha Oryx and Abu Dhabi Pension Fund – which agreed to subscribe for shares worth a combined $180m.

ADNOC L&S growth strategy

ADNOC L&S plans to pay an annualised 2023 cash dividend of $260m and expects to increase this by at least 5 per cent annually. The company, which has been expanding its fleet to cope with increased demand from the state-owned firm’s businesses, is targeting capital expenditure of up to $5bn in the medium term.

Founded in 2016 following a merger between Abu Dhabi National Tanker Company, Petroleum Services Company and Abu Dhabi Petroleum Ports Operating Company, ADNOC L&S delivers crude oil, refined products, dry bulk and liquefied natural gas from Abu Dhabi to its international customers.

Citigroup, First Abu Dhabi Bank, HSBC Holdings and JPMorgan Chase & Co. have been appointed as joint global coordinators and joint book runners. Abu Dhabi Commercial Bank, Arqaam Capital, Credit Agricole, EFG-Hermes, International Securities and Societe Generale SA are joint book runners for the IPO.

Over the years, ADNOC has been selling stakes in its units as part of a broader strategy to help fund the diversification of the economy. It listed chemicals firm Borouge last year and has previously sold shares in ADNOC Drilling and fertilizer company Fertiglobe.

The first three months of 2023 proved MENA IPOs continue to go against global trends. Even though the number of IPOs in Q1 2023 was lower than in Q1 2022 (10 IPOs), the mega IPO of ADNOC Gas stood out for the region with the highest proceeds globally for the quarter.

“2023 continues to have a healthy IPO pipeline across the region with several initiatives to support private and government entities on their path to IPO,” said Brad Watson, EY MENA Strategy and Transactions Leader.

Kuwait-based asset management firm, KAMCO Invest, said the IPO pipeline for 2023 remains strong and “based on our estimates at the start of the year the pipeline could range between 27-39 companies between announced and rumoured GCC IPO issuances”.

Read: Abu Dhabi’s ADNOC Gas surges on ADX trading debut

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