The maritime logistics firm expects the final offer price to be announced on May 26, after the book-building process
ADNOC Group has increased the size of the initial public offering (IPO) of its logistics division to 19% due to “significant investor demand” for what will be the second largest listing in the Middle East this year, after the IPO of the energy company's gas business worth $2.5 billion in March.
The state-owned energy company initially planned to raise $607 million (2.23 billion dirhams) by offering a 15 percent stake in ADNOC Logistics & Services (ADNOC L&S). ADNOC said it increased the number of common shares offered in the IPO of its marine logistics division to 1.41 billion, representing a 19 percent stake, from 1.99 to 2.01 dirhams apiece to raise 2.83 billion dirhams at the top of the range.
“We are pleased to announce that we will increase the proposed size for the ADNOC L&S IPO, which should be the second largest market debut this year in the Middle East region, which will be another remarkable achievement of ADNOC in its ongoing value creation program,” said Khaled Al Zaabi, CFO of the ADNOC Group.
Al-Zaabi said the IPO received exceptional demand across all tranches and generated significant interest from the local, regional and global investment community. The IPO of ADNOC L&S is expected to be the next landmark listing in Abu Dhabi, strengthening the position of the energy group as a key catalyst for attracting foreign direct investment and at the same time strengthening the local financial equity market.
ADNOC L&S reported that the subscription period for the offer remains unchanged. The company offers shares in two tranches — to institutional investors and retail investors — in the period from May 16 to 24, with the expected debut of trading on the Abu Dhabi Securities Exchange on June 1, 2023.
In response to significant demand, we have increased the number of shares in the Initial Public Offering (IPO) of ADNOC Logistics & Services to 19% – including an upsize of the UAE retail offering.#EnergyForLife
— ADNOC Group (@ADNOCGroup) May 22, 2023
The maritime logistics firm expects the final offer price to be announced on May 26, after the book-building process.
ADNOC L&S’s IPO drew in four cornerstone investors including Al Seer Marine Supplies & Equipment Company, National Marine Dredging Company, Alpha Oryx and Abu Dhabi Pension Fund – which agreed to subscribe for shares worth a combined $180m.
ADNOC L&S growth strategy
ADNOC L&S plans to pay an annualised 2023 cash dividend of $260m and expects to increase this by at least 5 per cent annually. The company, which has been expanding its fleet to cope with increased demand from the state-owned firm’s businesses, is targeting capital expenditure of up to $5bn in the medium term.
Founded in 2016 following a merger between Abu Dhabi National Tanker Company, Petroleum Services Company and Abu Dhabi Petroleum Ports Operating Company, ADNOC L&S delivers crude oil, refined products, dry bulk and liquefied natural gas from Abu Dhabi to its international customers.
Citigroup, First Abu Dhabi Bank, HSBC Holdings and JPMorgan Chase & Co. have been appointed as joint global coordinators and joint book runners. Abu Dhabi Commercial Bank, Arqaam Capital, Credit Agricole, EFG-Hermes, International Securities and Societe Generale SA are joint book runners for the IPO.
Over the years, ADNOC has been selling stakes in its units as part of a broader strategy to help fund the diversification of the economy. It listed chemicals firm Borouge last year and has previously sold shares in ADNOC Drilling and fertilizer company Fertiglobe.
The first three months of 2023 proved MENA IPOs continue to go against global trends. Even though the number of IPOs in Q1 2023 was lower than in Q1 2022 (10 IPOs), the mega IPO of ADNOC Gas stood out for the region with the highest proceeds globally for the quarter.
“2023 continues to have a healthy IPO pipeline across the region with several initiatives to support private and government entities on their path to IPO,” said Brad Watson, EY MENA Strategy and Transactions Leader.
Kuwait-based asset management firm, KAMCO Invest, said the IPO pipeline for 2023 remains strong and “based on our estimates at the start of the year the pipeline could range between 27-39 companies between announced and rumoured GCC IPO issuances”.
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