Adnoc Drilling raises more than $1.1bn in oversubscribed IPO

Total gross demand for the listing amounted to more than $34bn, implying an oversubscription of more than 31 times

Abu Dhabi National Oil Company raised more than $1.1 billion from an 11 per cent sale of shares in its drilling unit through an initial public offering, which it said was oversubscribed.

Last week, Adnoc raised the offering from 7.5 per cent, selling 1.76 billion shares of Adnoc Drilling, at an offer price of Dh2.30 per ordinary share.

The IPO was multiple times oversubscribed and registered "significant demand" from UAE retail and qualified institutional investors, the company said in a statement on Monday. Total gross demand for the offering amounted to over $34bn, implying an oversubscription level in excess of 31 times in aggregate.

Adnoc Drilling is one of the largest drilling companies in the Middle East, operating 107 onshore, offshore and island rigs, of which 11 are rented. The company, which began operations in 1972, has expanded its fleet of rigs, adding 67 since 2010, in line with the growth in oil and gas production capacity at Adnoc.

The size of the first tranche reserved for UAE retail investors was set at 10 per cent.

A second tranche reserved for local, regional and international qualified institutional investors was set at 86 per cent and the size of the third tranche reserved for employees of Adnoc Group and UAE national retirees was set at 4 per cent, the company said.

Investors from the first and third tranches will receive a text message confirming their respective allocation on September 30.

The company will start trading on the Abu Dhabi Securities Exchange (ADX) on October 3 under the symbol ADNOCDRILL and ISIN AEA007301012.

Adnoc will continue to maintain its majority 84 per cent stake in Adnoc Drilling. US energy services company Baker Hughes, which entered into a strategic partnership with Adnoc Drilling in October 2018, will retain its 5 per cent interest. US contract oil and gas driller Helmerich & Payne will hold 1 per cent through its IPO cornerstone investment announced on September 8, 2021.

First Abu Dhabi Bank, Goldman Sachs, HSBC and JP Morgan acted as joint global co-ordinators. EFG-Hermes, Emirates NBD Capital, International Securities, Merrill Lynch and Société Générale acted as joint bookrunners. FAB acted as the lead receiving bank and Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank and Emirates NBD acted as receiving banks.

Moelis & Company acted as an independent financial adviser. The Internal Sharia Supervision Committees of FAB and HSBC confirmed that the IPO is compliant with Sharia principles.

This is the second IPO for the Adnoc Group, which listed 10 per cent of the company's distribution business in 2017. Adnoc doubled the amount of its free-floating stock to 20 per cent in September last year, following a block placement of 1.25 billion shares, valued at $1bn, with institutional investors.

The ADX has outperformed regional markets, rising more than 50 per cent since the beginning of this year, which has pushed its market capitalisation to about Dh1.39 trillion ($378.6bn).

Adnoc Drilling’s IPO is the second major listing this year in Abu Dhabi and upon settlement will be the largest-ever on the ADX listing.

In July, Al Yah Satellite Communications (Yahsat), a unit of Mubadala Investment Company, raised about $730 million through a public offering.

Updated: September 27th 2021, 10:06 AM
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