Adnoc L&S IPO: Company set to raise $769m from oversubscribed offering

Move by global energy company values subsidiary at $4.05 billion

Adnoc headquarters in Abu Dhabi. Adnoc raised the stake being offered in its marine and logistics unit to 19 per cent, from 15 per cent, earlier this week. Reuters

Adnoc Logistics & Services, an Adnoc subsidiary, is set to raise about $769 million from the sale of a 19 per cent stake in an Abu Dhabi Securities Exchange listing that has been heavily oversubscribed.

The company set the final price of its initial public offering at the top end of the range, at Dh2.01 a share, valuing the company at $4.05 billion.

It had earlier set the price range of its IPO between Dh1.99 and Dh2.01 a share.

Earlier this week, the company increased the number of shares allocated to retail investors in its initial public offering due to “significant” demand.

The retail portion of the IPO was raised to more than 1.4 billion shares, from 1.1 billion, equal to 19 per cent of the total shares on offer and up from the previously announced 15 per cent.

The offering was significantly oversubscribed by local, regional and international investors, with total gross demand amounting to more than $125 billion, implying an oversubscription level of 163 times on average, “the highest-ever oversubscription level for a UAE book-build IPO”, Adnoc said.

The listing is the sixth the global energy company “has successfully brought to market within five years and marks the next remarkable achievement in our ongoing value creation programme”, said Adnoc group chief financial officer Khaled Al Zaabi.

The company will start trading on the Abu Dhabi Securities Exchange on June 1 under the ticker symbol “ADNOCLS”, with an international securities identification number of AEE01268A239.

Adnoc will continue to own an 81 per cent stake in the company.

Al Seer Marine Supplies and Equipment, the National Marine Dredging Company, Alpha Oryx (ultimately owned by the Abu Dhabi Development Holding Company) and the Abu Dhabi Pension Fund have – directly or indirectly – committed to become cornerstone investors in the IPO, with a combined commitment of about $180 million.

“Adnoc L&S is a highly attractive value proposition, underpinned by strong and long-term growth credentials and a progressive dividend payout,” Mr Al Zaabi said.

Earlier this month, the company announced plans to pay dividends twice each financial year.

The Adnoc L&S IPO comes amid a flurry of listings in the Gulf region and Dubai, which plans to bolster the size of its capital markets.

Middle East IPOs raised more than $23 billion in 2022, compared with $7.52 billion from 20 offerings in the previous year.

That was the highest share for the Gulf region after 2019, when Saudi Aramco went public in a $29 billion offering, the world’s largest.

Abu Dhabi accounted for 14 per cent of all listings worldwide in the first quarter of 2023, an indication of the strength of its capital markets amid a challenging global IPO market, consultancy EY said in the latest edition of its Global IPO Trends report in March.

The UAE capital attracted $3 billion worth of listing proceeds in the three months ended March, placing it third worldwide.

Citigroup, First Abu Dhabi Bank, HSBC and JP Morgan were joint global co-ordinators on the Adnoc L&S IPO.