Expected returns of more than 30% on the IPO of "ADNOC Drilling"

Rasmala Investments expects the ADNOC Drilling subscription to generate returns of 30% or more after making the comparisons

In an interview with Al-Arabiya, Ali Taqi, head of equity management at Rasmala, said that the demand for the subscription had been covered since the first day, and he expected it to double for several reasons, including the attractive valuation. Settlement occurs after determining the number of shares.

He also pointed out that the sector represented by ADNOC Drilling and the company's components helps to increase demand, pointing out that large orders usually come during the last two days of subscriptions.

The IPO of ADNOC Drilling closes on September 23, as the Abu Dhabi National Oil Company ADNOC announced a week ago the price of the IPO share of ADNOC Drilling at 2.30 dirhams per share, This makes the market value of the company 36.7 billion dirhams, equivalent to 10 billion dollars.

The subscription period officially started last Monday, and will close on September 23 for retail investors in the UAE and September 26 for qualified local and international institutional investors. ADNOC Drilling is expected to be listed on the Abu Dhabi Securities Exchange on October 3, 2021.

The head of equity management at Rasmala Investments believes that ADNOC Drilling's evaluation is good when compared to international companies in its sector, many of which record losses, adding that the contracts signed with The parent company, ADNOC, guarantees it a kind of margin that makes its profitability higher compared to its peers.

In this context, he stressed that the company's management's promises to increase dividends by 5% during the first 5 years, will support an increase in the share price between 30 and 35%, and will raise dividends to 4.7% to come on par with ADNOC Distribution's distributions despite their two different business models.

The Saudi and Abu Dhabi markets are witnessing a momentum in IPOs this year, which the head of the equity department at Rasmala Investments attributed to the existing liquidity and current valuations. The market climate has become good for proposals.

He also pointed out that the upcoming listings are different and in various sectors, which is important for any economy because the stock market is supposed to be a mirror that reflects the sectors of the economy, the opposite of what it was The case was 20 years ago when the shares of banks and telecom companies were dominant, but now we see the entry of petrochemicals, real estate, aviation, ports and others.

He added that Aramco's IPO changed the view that prevailed in the market, which excluded offering upstream activities, saying that all government assets could be subscribed to and obtained a favorable valuation. budgets.