Adnoc Distribution to be included in FTSE Emerging Markets Index

The company, which is listed on the Abu Dhabi Securities Exchange, was added to the MSCI Emerging Markets Index last year

Adnoc Distribution, the UAE's largest fuel retailer, will be included in the FTSE Emerging Markets Index as of the close of business on September 16, 2021, the company said on Sunday.

Its inclusion, which comes after it was added to the MSCI Emerging Markets Index last year, is subject to final confirmation by the FTSE on September 6, Adnoc Distribution said in a statement to the Abu Dhabi Securities Exchange, or ADX, where its shares are traded.

"Following the inclusion of Adnoc Distribution in the MSCI EM Index in May 2021, the FTSE EM Index marks another important milestone in Adnoc Distribution’s successful equity story," said Bader Al Lamki, Adnoc Distribution chief executive.

The move is testament to "the company’s growth story and its strong standing within the fuel retail sector", he added.

The FTSE Emerging Markets Index is an international equity index that tracks stocks from emerging markets globally and includes large and mid-cap securities. Adnoc Distribution joins nine other UAE companies that are part of the index.

"The inclusion of Adnoc Distribution in the index will attract more foreign investors to the company's stock and diversify its shareholder base," said Vijay Valecha, chief investment officer at Dubai-based Century Financial.

"The company has several equity placements leveraged on significant investor demand for Adnoc Distribution shares, driven by its attractive value proposition," he added.

Joining the FTSE Emerging Markets Index will "add depth to the market", said Ali El Adou, head of asset management at Daman Investments.

Inclusion "will add more liquidity ... and is positive news for the market overall. We expect more emerging markets investors to start looking at Adnoc Distribution," he added.

Adnoc Distribution, which listed 10 per cent of its shares on the ADX in 2017, doubled the amount of its free-floating stock to 20 per cent last September following a block placement of 1.25 billion shares, valued at $1 billion, with institutional investors.

At the time, the company said the transaction – the largest block placement of a publicly listed GCC company – helped to diversify its shareholder base and allowed for greater liquidity of its shares on the ADX.

In May, Adnoc said it had successfully raised $1.64bn through the sale of new shares and issuance of exchangeable bonds in Adnoc Distribution.

The company offered 375 million shares, equal to 3 per cent of its share capital, and a three-year unsecured bond that could be exchanged for a further 7 per cent of shares, subject to certain conditions.

The placement of additional shares will leave the Adnoc Group with a 70 per cent interest in its fuel distribution arm.

"Our continued focus is to provide modern fuel retail convenience to customers, deliver on our ambitious strategy and build long-term shareholder value through the next phase of our expansion,” Mr Al Lamki said.

Earlier this month, Adnoc Distribution reported a 2.1 per cent increase in second-quarter net income as revenue climbed, supported by higher fuel volumes and cost efficiencies. Net profit for the three month period to the end of June rose to Dh521 million ($141.96m).

The company operates 457 retail fuel stations, 340 convenience stores as of the end June. Adnoc Distribution is the only fuel retailer operating in all seven emirates in the UAE. In 2018, the company expanded its operations internationally and it opened two service stations in Saudi Arabia.

Updated: August 22nd 2021, 9:30 AM
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