Abu Dhabi's energy major is seeking to raise up to 2.23 billion dirhams ($607 million) from the initial public offering of its marine logistics unit, which is expected to be the second largest listing in the Middle East this year.
ADNOC offered about 1.11 billion shares in ADNOC Logistics and Services Company with a price range of 1.99 to 2.01 dirhams per share, valuing the company at up to $4.05 billion, according to a statement issued on Tuesday.
Al Seer Marine Supplies & Equipment Company, National Marine Dredging, Alpha Oryx Limited (owned by ADQ Wealth Fund) and Abu Dhabi Pension Fund have committed to become anchor investors participating in the combined IPO of about $180 million.
The deal is the second listing this year of a unit by state-owned ADNOC after it raised $2.5 billion in an initial public offering of its gas business in March.
IPO deals in the region
The value of initial public offering deals in the Middle East is down 69% compared to the same period last year and amounted to $3.5 billion, according to data compiled by Bloomberg. Lower oil prices and concerns about slowing global economic growth have weighed on the market, and the MSCI GCC index has fallen by almost 17% in the past year.
Nevertheless, IPOs in the Middle East are doing much better than other regions such as Europe, where IPOs are still struggling to get off the ground.
In 2023 Abu Dhabi has so far dominated Gulf listing activity, thanks mainly to the IPO of ADNOC Gas, while Saudi Arabia's IPOs have been quiet and Dubai has not seen any major privatizations like last year.
ADNOC has been selling stakes in its units since around 2017 as part of a strategy to help fund diversification of the economy and reduce its reliance on fossil fuels. Borouge chemicals listed last year and previously sold stakes in the drilling unit, fertilizer company Fertiglobe and others.
ADNOC Supply Plans
ADNOC Logistics and Services plans to pay dividends of 954.9 million dirhams ($260 million) for the year ending on December 31, 2023, of which 238.7 million dirhams will be paid next October, with 477.4 million dirhams paid in April 2024. The company also expects to increase dividends by 5%. annually in the medium term. The company, which is expanding its fleet to meet growing demand from state-owned companies, is targeting capital expenditures of between $4 billion and $5 billion in the medium term.
The company also plans a compound annual growth rate of at least 10% for its revenues over the medium term.
The institutional book building period runs from Tuesday through May 24, with the final offering price to be set on May 25. Individual subscription will close on May 23 and share trading is expected to begin on June 1.
ADNOC has selected Citigroup, First Abu Dhabi Bank, HSBC Holdings and JPMorgan to act as joint global coordinators and joint bookrunners. Abu Dhabi Commercial Bank, Arqaam Capital, Credit Agricole, EFG-Hermes, International Securities and Societe Generale are also acting as joint managers for the offering.
