Abu Dhabi March 3 2023: Abu Dhabi’s main oil company raised $2.5 billion from the initial public offering of its gas business, pulling off the year’s biggest listing and continuing a trend that saw the Middle East emerge as a bright spot for share sales in 2022.
Abu Dhabi National Oil Co. sold 3.84 billion shares — or a 5% stake — in Adnoc Gas at 2.37 dirhams ($0.65) each, in the upper half of a range that began at 2.25 dirhams, according to a statement on Friday. The deal values Adnoc Gas at about $50 billion, roughly in line with Occidental Petroleum Corp.
Investors put in orders worth $124 billion, which is an oversubscription level of more than 50 times and represents the highest-ever total demand for an IPO in the Middle East and Africa to date, according to Adnoc.
Shares of Adnoc Gas are due to start trading on March 13.
Adnoc had already increased the size of the offering by 25% on the back of strong investor demand, something that’s almost become commonplace in the Persian Gulf. Most regional IPOs in 2022 reported double-digit oversubscription levels at a time when deals were being pulled or postponed elsewhere.
Gulf IPOs raised almost $23 billion last year, accounting for half of the total proceeds in Europe, the Middle East and Africa. A surge in energy prices following Russia’s invasion of Ukraine buoyed the region’s stock markets while concerns about high inflation put a lid on listings globally.
The Adnoc Gas IPO is the biggest-ever in Abu Dhabi, surpassing chemicals firm Borouge’s $2 billion deal in mid-2022. It’s the latest in a series of stock sales in the Gulf as governments seek to fund a transition away from fossil fuels and bring more international investors into their markets.
Cornerstone investors, several including Abu Dhabi state-linked entities, committed to buy $850 million of stock in the IPO. Among them were Alpha Dhabi and International Holding Co.
The IPO ran on an accelerated timeline, with Adnoc only announcing the listing in late November and formally creating the gas unit at the beginning of this year. The tight schedule led to Goldman Sachs Group Inc. and Bank of America Corp. dropping off the deal because there wouldn’t have been time to get Adnoc Gas’ financials audited by a Big Four accounting firm, Bloomberg News reported.
Prior to the IPO, Adnoc transferred 5% of Adnoc Gas to Taqa, a state-controlled power producer in Abu Dhabi.
First Abu Dhabi Bank PJSC and HSBC Holdings Plc are the lead banks on the IPO. Abu Dhabi Commercial Bank PJSC, Arqaam Capital Limited, BNP Paribas, Deutsche Bank AG, EFG-Hermes and International Securities are joint bookrunners. Moelis & Co. is an independent financial adviser.
