ADNOC Logistics gets $125bn in orders for $769m IPO

ADNOC Logistics & Services drew orders worth $125 bn for its $769m initial public offering in Abu Dhabi, as investors flocked to the share sale amid a dearth in deals in other regions.

Abu Dhabi National Oil Company (ADNOC) sold 1.41 billion shares — or a 19 per cent stake — in ADNOC L&S, its maritime logistics unit, at Dhs2.01  each, the top of a narrow range that started at Dhs1.99, according to a statement on Thursday. That values the company at $4.05bn.

ADNOC had already increased the size of the float by over a quarter on strong investor demand. That’s been a recurring theme in Middle Eastern IPOs, which have stood out against a global slump in listings, as high oil prices buoy the region.

State-owned ADNOC raised $2.5bn earlier this year from the listing of its gas business, a deal that was also increased in size and ended up pulling in $124bn in orders. Investors have been drawn to the region’s IPOs by the high dividend yields offered, which are attractive in a rising interest rate environment.

Still, proceeds from IPOs in the Middle East have dropped 69 per cent from the same period a year ago and stand at $3.5bn, data compiled by Bloomberg show, indicating it’s not immune from the global slowdown. However, the region has largely escaped the poor performance seen in European IPOs, where many of the larger deals are underwater.

ADNOC’s strategy

ADNOC has been selling stakes in its units since about 2017 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 fertilizer company Fertiglobe, among others.

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 firm, which has been expanding its fleet to cope with increased demand from the state-owned firm’s businesses, is targeting capital expenditure of $4bn to $5bn in the medium term.

Its shares are due to start trading on June 1. Citigroup, First Abu Dhabi Bank, HSBC Holdings and JPMorgan Chase were joint global coordinators on the ADNOC L&S IPO.