Adnoc raises $2.8bn from Adnoc Gas offering on strong institutional investor demand

The sale of 3.1 billion shares was oversubscribed 4.4 times, Abu Dhabi energy company said

Adnoc will continue to retain a majority 86 per cent shareholding in Adnoc Gas. AFP

Abu Dhabi's Adnoc raised about Dh10.4 billion ($2.84 billion) from the sale of 3.1 billion shares in Adnoc Gas on “exceptional” demand from Gulf and international institutional investors.

The marketed offering, announced on Thursday, was oversubscribed 4.4 times and was priced at Dh3.40 per share, representing a “competitive 5 per cent discount” to the closing share price of Dh3.58 on February 20, but about 43 per cent above the initial public offering price of Dh2.37 per share, Adnoc said on Friday.

This sale represents 4 per cent of the issued and outstanding share capital of Adnoc Gas and will increase the company’s free float by 80 per cent. Settlement of the offering is expected to occur on or around February 26, 2025, the Abu Dhabi energy company said.

The sale is aimed at improving liquidity and supporting the inclusion of Adnoc Gas in the MSCI emerging market index and the FTSE emerging market index. This may take place at the next quarterly review, subject to Adnoc Gas meeting all the relevant inclusion criteria.

“Index inclusion of Adnoc Gas would contribute to the diversification of the company’s investor base and significantly broaden awareness of its value proposition,” Adnoc said.

The sale marks the “first-ever marketed offering in the UAE and the largest placement on the ADX to date”, Khaled Al Zaabi, group chief financial officer at Adnoc, said.

“As a dedicated, long-term majority shareholder, Adnoc will continue to support Adnoc Gas, which is integral to Abu Dhabi and Adnoc’s decarbonisation and growth ambitions.”

Adnoc Gas, which has access to 95 per cent of the UAE's natural gas reserves, reported net income of a “record $5 billion” for the 2024 fiscal year, a 13 per cent year-on-year increase. The company also recorded $1.38 billion in fourth-quarter profit, its highest quarterly net income since its initial public offering.

Adnoc Gas said the profit increase came on the back of strong demand for domestic gas. In the Emirates, it supplies to customers, mostly utilities and industrial companies, through an extensive network of pipelines.

The company is also set to acquire Adnoc’s majority stake in the Ruwais LNG project, which will have a total capacity of 9.6 million tonnes per annum. The project is scheduled to start in the second half of 2028.

Export boost

Adnoc Gas is also seeking to boost exports of products such as liquefied natural gas, liquefied petroleum gas and naphtha.

About 80 per cent of Ruwais LNG's supply was committed in the form of long-term contracts, the company's chief financial officer Peter van Driel told The National.

"The fact that 80 per cent is already sold means people really value security of supply; otherwise, you would wait for the lowest price," he said, adding that the remaining 20 per cent is reserved for spot cargoes, and Adnoc Gas is "well positioned" to go either west or east.

The Trump administration is actively pushing to expand LNG exports from the US – the top global LNG exporter – to markets in Asia including India and Japan, where Adnoc Gas has also secured long-term deals.

"We are well placed to serve markets in Asia and also the Far East. And, on top of that, you see a lot of new markets coming into play [such as] the Philippines, Bangladesh [and] Vietnam," Mr van Driel said.

Those countries once relied on their own gas resources, which are now exhausted, he added.

Global LNG demand is estimated to rise by more than 50 per cent by 2040, driven by industrial coal-to-gas switching in China and increased LNG use in South Asian and Southeast Asian countries to support economic growth, Shell said in its LNG Outlook report last year.

LNG trade worldwide reached 404 million tonnes in 2023, up from 397 million tonnes in 2022, with tight supplies constraining growth, the report said.

However, the market is expected to face a glut in the coming years as a wave of new LNG export capacity comes online, particularly from the US and Qatar.

Majority stake

Adnoc will continue to retain a majority 86 per cent shareholding in Adnoc Gas and has also agreed to a restriction from selling further shares for a period of six months from closing of the offering, it said on Friday.

In 2023, Adnoc raised about Dh9.1 billion from the sale of a 5 per cent stake in Adnoc Gas, which was the UAE's biggest IPO that year.

BofA Securities, Citi, EFG-Hermes, First Abu Dhabi Bank, HSBC and International Securities acted as joint global co-ordinators and joint bookrunners for the offering.