Adnoc considers further listings of subsidiaries

Company may generate up to Dh7.4 billion from the public float of shares in Adnoc Distribution

Subcsription for Adnoc Distribution shares opened on Sunday. Courtesy Adnoc

The Abu Dhabi National Oil Company (Adnoc), the state-controlled oil and gas major which may generate as much as Dh7.4 billion from the public float of its distribution business this month, is already considering further listings of its business units, according to Adnoc group chief executive and UAE state minister Dr Sultan Al Jaber. 

The initial public offering (IPO) of Adnoc Distribution, Adnoc's subsidiary which runs services stations and Oasis-branded retail outlets, is set to add to the have a positive impact on local equity capital markets that have seen a dearth of shares floats in past few years as companies shelved their plans to raise capital in the wake of lower oil prices and slower economic growth.

"We will continue to consider the potential minority listings of some of our services businesses where a listing might be appropriate, as well as, of course, other options," Dr Al Jaber said in an emailed response to questions from The National. "Our key, overriding objectives are unlocking and maximizing value and performance across the Adnoc Group."

Dr Al Jaber's comments came as subscriptions opened on Sunday for up to 2.5 billion shares in Adnoc Distribution, runs service stations and retail outlets in Abu Dhabi, Sharjah and the Northern Emirates.

The share sale marks the first part-privatisation of an Adnoc subsidiary, and the first major listing on the Abu Dhabi stock exchange (ADX) in over five years.

Dr Al Jaber declined to speculate on which subsidiary would be listed next, but ruled out a sale of shares in Adnoc as a holding company.

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Adnoc Distribution on Sunday said that the sale of between 1.25 billion to 2.5 billion shares – representing 10 to 20 per cent of the total company – will be priced at a range of between Dh2.35 to Dh2.95 per share.

At the high end, the sale could generate Dh7.4 billion, making it the UAE's largest offering since DP World's IPO on Nasdaq Dubai in 2007. At the lower end, it would still be the largest IPO in Abu Dhabi in over 15 years.

“We believe the addition of Adnoc Distribution to the ADX will increase the attractiveness of the ADX to local, regional and international investors by bringing a new retail champion to the bourse,” said Dr Al Jaber.

A  5 per cent tranche is open to retail investors, with a minimum subscription of Dh10,000, while the remainder of the offering will be open to government, international institutional investors and high net worth individuals.

“We should see great interest, especially from UAE retail and high net worth investors, as it’s a play on local consumption and what has always been a successful government entity,” said Tariq Qaqish, managing director of asset management at financial services firm Menacorp.

Mr Qaqish said investors would be looking to Adnoc Distribution to provide further clarity on plans to increase margins and expand its business, particularly whether it had plans to buyout petrol stations in Dubai, as well as its intentions to expand beyond the UAE.

Adnoc Distribution will be only the fifth major company to list on the Abu Dhabi stock exchange in the past decade, providing a much needed stimulus to the emirate’s bourse.

"The listing will brings a new sector, ie logistics and distribution, to the Abu Dhabi market , which is positive as it diversifies what's on offer," said Ali Adou, head of asset management at Daman Investments.

"Overall it's likely to be very positive from a purely market perspective for UAE bourses,  particularly, for Abu Dhabi."

The listing of Adnoc Distribution may well open the door to further listings of other government-owned companies beyond the Adnoc family, he said.

Mubadala Investment Company, an Abu Dhabi government-owned strategic firm, last month announced plans to take Emirates Global Aluminium (EGA) public through a share float next year.