Adnoc to offer up to 20% of distribution arm

REBECCA SPONG
Adnoc CEO Sultan Ahmed Al-Jaber speaks during the Abu Dhabi International Petroleum Exhibition and Conference last week. (AFP)

LONDON: Abu Dhabi National Oil Company (Adnoc) is set to offer as much as 20 percent of its fuel distribution unit to investors. Its distribution arm manages petrol stations and convenience shops across the UAE.
The national oil company is offering a minimum stake of 1.25 billion shares, or 10 percent, up to a maximum of 2.5 billion shares, according to a Nov. 20 filing to the Abu Dhabi Exchange (ADX). The offer price range is due to be announced on Nov. 26.
If the initial public offering (IPO) is well-received by investors, it could be the first of a number of listings in the region, according to analysts.
Adnoc also plans to raise a $2.25 billion loan for its distribution unit prior to selling the stake, Reuters reported, citing sources familiar with the matter.
The $2.25 billion loan, which includes a $1.5 billion term loan and a $750 million revolving credit facility, is aimed at “establishing a well-structured balance sheet for the company” ahead of its IPO, Reuters reported.
“A successful Adnoc IPO should encourage other government entities, especially national oil companies in the Gulf, to list and become more transparent and raise cash for expansion,” Nitin Garg, manager, research, at Bahrain-based investment bank SICO, told Arab News. “The appeal and appetite for this IPO will depend on the valuation, which could be at a premium as the business has more of retail nature rather than being cyclical or industrial,” he added.
The drop in oil prices in recent years has pushed many Gulf governments to consider listing parts of its state-owned companies to bolster their finances.
Abu Dhabi-based Emirates Global Aluminium is expected to list next year while Saudi Aramco is reported to be on track to offer 5 percent of the company in late 2018, in a listing that could raise as much as $100 billion.
Aramco has yet to confirm the location of the listing, with international financial centers such as London and New York vying for the opportunity.
Plans to list at least 10 percent of Adnoc’s distribution arm were announced on Nov.13 during the ADIPEC oil and gas event, during the opening address by Sultan Ahmed Al-Jaber, UAE Minister of State and ADNOC Group CEO.
“This marks a major milestone in our history and a significant step-change in our transformation.
“Importantly, it also signals a new chapter in the growth and development of the UAE’s capital markets,” he said.
“But to be clear, ADNOC at a holding company level, will always remain wholly owned by the Abu Dhabi government, ” he added.
The listing would also support the company’s growth plans and the government’s 2030 economic vision, said Al-Jaber. The oil company is aiming to increase its upstream production capacity to 3.5 million barrels per day as well as upping its crude refining capacity by 60 percent and more than tripling its petrochemical ­production.
Joint global coordinators on the listing are Citigroup, First Abu Dhabi Bank, HSBC Bank Middle East and Merrill Lynch International. Joint bookrunners are EFG Hermes, Goldman Sachs International and Morgan Stanley.