Adnoc aims to float about 4 per cent of its gas business in an initial public offering on the Abu Dhabi Securities Exchange, it said on Friday.
The state energy company will sell more than three billion shares in its gas processing and marketing unit, Adnoc Gas.
The selling shareholder can increase the size of the public offering at any time before pricing of the deal, Adnoc said.
The offer price will be “determined based on the offer price range”, and will be announced on the first day of the offer period, which begins on February 23 for the first and second tranches.
The offer period for retail investors, including individuals, Adnoc employees residing in the UAE and Emiratis who retired from the group and who live in the country, will close on March 1.
The second tranche for qualified investors is expected to close on March 2.
Adnoc Gas expects to list on the ADX on March 13, it said.
Adnoc has also transferred 5 per cent of Adnoc Gas to the Abu Dhabi National Energy Company, better known as Taqa.
The parent company will continue to own 91 per cent of its gas subsidiary after the IPO, Adnoc said.
Adnoc Gas plans to pay $3.25 billion in dividends for 2023, split in two payments. It intends to increase the annual dividend amount by 5 per cent from 2024 to 2027, it said.
“This is the fifth occasion where we are bringing an Adnoc company to the market in as many years, and we are delighted to, once again, offer international and local investors a highly compelling investment opportunity,” said Khaled Al Zaabi, Adnoc's acting group chief financial officer.
Adnoc has listed its distribution and drilling businesses, as well as Fertiglobe and Borouge on the ADX.
In November, Adnoc approved plans to combine the operations, maintenance and marketing of Adnoc Gas Processing and Adnoc LNG into one consolidated entity. The new entity, Adnoc Gas, began operations on January 1.
Adnoc Gas has access to 95 per cent of the UAE's natural gas reserves, estimated to be the seventh largest globally. The company also supplies more than 60 per cent of the UAE's gas needs, according to its IPO prospectus.
“With gas demand expected to increase over the coming years, the Adnoc Gas group is focused on increasing its production capacity to maximise output in order to benefit from Adnoc Group’s 2030 integrated strategy, which includes increasing capacity of gas and low carbon/renewable energy production as part of its accelerated growth strategy,” the company said.
Adnoc Gas, which will operate eight gas processing sites and a pipeline network of more than 3,250km, is expected to unlock “significant” financial and operational opportunities.
For the 10 months ended October 2022, Adnoc Gas reported adjusted revenue of $21.2 billion, adjusted earnings before interest, amortisation and tax of $7.5 billion and net income of $4.2 billion, Adnoc said in the IPO prospectus on its website.
With capacity of about 10 billion standard cubic feet of gas per day, Adnoc Gas aims to serve a wider range of domestic and international customers with an expanding portfolio of gas products.
“Natural gas is central to the energy transition and, as the UAE’s gas champion, Adnoc Gas is well positioned to responsibly harness our significant natural gas resources while driving efficiencies, delivering value and reliably supplying this key fuel to meet the world’s growing energy needs,” Mr Al Zaabi said.
Adnoc Gas, which receives its feedstock from the parent company, produces methane, ethane, propane and butane (liquid petroleum gases), paraffinic naphtha condensate and sulphur.
The gas processing and marketing company also produces liquefied natural gas while its industrial gases business produces gaseous and liquid nitrogen, liquid oxygen and a mix of krypton and xenon.
“Adnoc Gas is a vital component of the UAE’s energy system and is at the heart of the country’s goals of achieving gas self-sufficiency and becoming a gas net exporter,” said the company's acting chief executive, Ahmed Alebri.
“With anticipated substantial and consistent revenues and resilient margins, we believe that Adnoc Gas is well positioned to benefit from robust long-term demand trends for global gas, whilst playing a critical role in driving decarbonisation in line with the UAE’s Net-Zero strategy.”
Adnoc Gas listing will be the first major IPO on the ADX in 2023 after a listing bonanza for markets in the GCC last year as issuers from both the public and private sectors raised funds amid robust investor demand.
ADX, the Arab world's second-largest bourse with a market capitalisation of about Dh2.54 trillion ($692 billion), has experienced a rush of listings in recent years amid Abu Dhabi's plans to boost its capital markets.
Companies that listed on the bourse last year include Borouge, the Abu Dhabi Ports Group, Abu Dhabi healthcare provider Burjeel Holdings and Bayanat, a geospatial data products and services provider owned by artificial intelligence and cloud computing company G42.
Americana, the largest quick-service restaurant operator in the Mena region, also raised $1.8 billion from its IPO in November when it was dually listed on the Abu Dhabi and Saudi stock exchanges.
The listing momentum is expected to continue this year as Abu Dhabi's Dh5 billion IPO fund, which was launched in 2021, has shortlisted six private sector companies to potentially receive investment and advisory services for listing their shares on the ADX, Mohamed Al Shorafa, chairman of the Abu Dhabi Department of Economic Development, said in November.
It is also in discussion with 30 other companies to list on the capital’s stock market.
There are several companies from outside the region that are also seeking the fund's support to list their shares on the ADX, Mr Al Shorafa told The National at the time.
Across the UAE, the listing of 11 companies will raise more than Dh8 billion this year, the deputy chief executive of the Securities and Commodities Authority said last month.
Four free-zone entities and two special purpose acquisition companies (Spacs) are in the 2023 listing pipeline, Mohamed Al Hadari said at the Mena IPO Summit.
“While 2021 was a year of recovery, 2022 and 2023 will see significant growth and development in the local markets and IPO markets,” he said.
In Abu Dhabi, supermarkets operator Lulu and Pure Health, a unit of Abu Dhabi-listed International Holding Company, have announced plans to list this year.
