Adnoc Distribution shares surge on ADX debut

Fuel retailer Adnoc Distribution shares surged on their first day of trading on the Abu Dhabi Securities Exchange (ADX), as retail investors piled into the emirate’s first stock listing in over six years.

Shares in the retail arm of the Abu Dhabi National Oil Company (Adnoc) – priced last week at Dh2.5 – surged by 16 per cent in the first minute of Wednesday trading, before paring gains throughout the day to close up 6 per cent at Dh2.65.

“There was no major sell-offs on the first day indicating that those that subscribed to the IPO see it as a long-term investment,” said Khaldoun Jaradat, trading manager at Ansari Financial Services.

“There’ll likely be a bit of more buy for the investors who weren’t able to participate in the IPO on Thursday, before things settle down next week.”

Adnoc Distribution’s IPO – the first share offering in an Adnoc subsidiary – raised Dh3.1 billion, valuing the company at around Dh31.3bn. The retail portion of the offering was oversubscribed by 22 times, on the back of significant local interest.

“Transactions such as this IPO will allow Adnoc to better manage our capital and portfolio of assets, and expand our range of new and existing partnerships – from the upstream to the downstream,” said Adnoc Group chief executive Dr Sultan Al Jaber in a statement.

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“The IPO also supports the reinvigoration of the ADX, and will be a catalyst for further growth and development of the UAE capital markets.”

Arqaam Capital issued a “buy” rating for the stock, predicting it would trade at Dh2.95 per cent – 11 per cent higher than Wednesday’s close – within a year, according to Bloomberg.

Over 45 million Adnoc Distribution shares changed hands on the first day of trading, accounting for over half of total trading volume on the bourse.

“Turnover in the stock was fairly low, but it’s still encouraging that it performed the way it did against a fairly negative market backdrop in the UAE, particularly with regard to Emaar Development’s debut last month,” said Julian Bruce, head of institutional trading at the Egyptian investment bank EFG Hermes in Dubai.

Stock markets in the Arabian Gulf have underperformed their emerging market peers in 2017, amid lower oil prices and geopolitical uncertainties in the region.

Bourses in Dubai and Abu Dhabi are 2.2 per cent and 3.6 per cent lower for the year respecitvely, while MSCI’s Emerging Market Index has gained 29 per cent. Kuwait’s stock exchange is the region’s best performer so far this year , rising 8.5 per cent.

Emaar Development, the first IPO in Dubai since 2014, saw its shares drop 4.3 per cent on its first day of trading last month. The stock closed down 2.2 per cent at Dh5.38 on Wednesday, 10.8 per cent lower than its original listing price.

Adnoc Distribution is the first new stock to be listed on the Abu Dhabi's main bourse since the debut of National Takaful Co or Watania shares in November 2011.

Nasdaq Dubai today launched a futures contract for Adnoc Distribution, together with one for Emaar Malls.

The listing of its distribution arm is part of a broader strategy by Adnoc to more proactively manage its assets and unlock greater value from across the entire business.

Adnoc Distribution currently operates 360 service stations and 235 Oasis convenience stores across the UAE except for Dubai. It plans to open its first petrol stations in Dubai and Saudi Arabia next year, the latter under a franchise model with an as yet unnamed local partner.