Adnoc Distribution IPO registers 22 times oversubscription on back of strong demand

Listing is part of Abu Dhabi state oil giant’s broader plans to maximise value from across its business

The retail tranche of Adnoc Distribution’s initial public offering was oversubscribed 22 times. Strong demand enabled the issuer to double the size of the retail tranche 10 per cent of the total offering size. Courtesy: Adnoc DistributionShow less

The retail tranche of Adnoc Distribution’s initial public offering (IPO) was oversubscribed 22 times, raising Dh3.49 billion, on the back of significant local interest. Strong demand enabled the issuer to double the size of the retail tranche to 10 per cent of the total offering size, said First Abu Dhabi Bank (FAB), which acted as joint global coordinator and lead receiving bank on the IPO.

“The response from investors for this IPO has been very positive, generating a record demand of investor number applications,” said Andre Sayegh, deputy group chief executive and head of corporate and investment banking at FAB.

“[This] is the first bookbuild IPO for the Abu Dhabi Securities Exchange (ADX), the first international offering, and it will also be the first and largest retail sector stock on the ADX, further diversifing the market and providing investors with a greater choice.”

The bank said the institutional tranche drew high quality, global institutional investors, and was oversubscribed multiple times. The IPO, for which the price was set at Dh2.5 a share for 10 per cent, valuED the Abu Dhabi National Oil Company's distribution unit at Dh31.1bn. It is the first listing by the group. The transaction precedes the anticipated offering of Saudi Aramco which is expected to raise $100bn in what is slated to be the biggest share sale in history.

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The listing is part of a broader strategy by Adnoc to more proactively manage its assets and unlock greater value from across the entire business.

Adnoc Distribution currently operates 360 service stations and 235 Oasis convenience stores across the UAE except for Dubai. It plans to open its first petrol stations in Dubai and Saudi Arabia next year, the latter under a franchise model with an as yet unnamed local partner.

IPO activity in the UAE is picking up after only two deals were completed throughout 2015 and 2016. Emaar Properties raised $1.3bn from the sale of shares in its development unit last month, while Mubadala Investment expects to IPO Emirates Global Aluminium (EGA) next year.