ADNOC Gas $2 billion IPO fully covered within hours of opening
(Bloomberg) — Investors snapped up all available shares within hours of the start of ADNOC Gas’s $2 billion initial public offering, showing that demand for Middle Eastern stock sales remains strong.
Abu Dhabi National Oil Co. is selling a 4% stake in Adnoc Gas, with each of the 3.07 billion shares being offered at between 2.25 and 2.43 dirhams (66 cents). The company will be valued at $50.8 billion at the high end, making it one of the world’s largest listed gas firms and roughly on a par with Eni SpA and Occidental Petroleum Corp.
It will be the biggest IPO so far this year, even if priced at the bottom of the range.
The order book opened on Thursday morning and is now fully covered, according to a message sent to investors and seen by Bloomberg. Several funds, including Abu Dhabi state-linked entities, committed $850 million as cornerstone investors. Among them were also Alpha Dhabi and International Holding Co.
The IPO will be the biggest-ever in Abu Dhabi if priced at 2.43 dirhams, pipping chemicals firm Borouge’s deal in mid-2022. It’s the latest in a series of stock sales in the Persian Gulf as governments seek to fund a transition away from fossil fuels and bring more international investors into their markets.
That effort, combined with surging oil and gas prices, helped the UAE and Saudi Arabia buck a global IPO slump in 2022.
In all of Europe, the Middle East and Africa so far this year, only $1.67 billion has been raised through IPOs, data compiled by Bloomberg show.
Prior to the IPO, ADNOC transferred 5% of Adnoc Gas to Taqa, a state-controlled power producer in Abu Dhabi.
ADNOC only announced the listing in late November and formally created ADNOC Gas at the beginning of this year. The tight schedule led to Goldman Sachs Group Inc. and Bank of America Corp. dropping off the deal, Bloomberg News reported.
ADNOC Gas will take orders from retail investors until March 1 and from institutional traders until a day later, with a final pricing announcement on March 3. Trading is expected to start on March 13.
The units merged to create ADNOC Gas made record underlying earnings of $8.7 billion in the year through October. The strong performance came as gas prices soared after Russia’s invasion of Ukraine and Europe rushed to secure supplies from other regions.
The UAE is among the countries Europe is looking to, and this month it delivered Germany’s first-ever cargo of liquefied national gas from the Middle East.
The UAE has the world’s seventh largest gas reserves and is seeking to triple its LNG export capacity to about 15 million tons annually in the next few years. ADNOC Gas will be at the forefront of that push.
Gas prices have slumped since August because of a mild winter in the northern hemisphere and a global economic slowdown. But they are still at historically-high levels in Europe and Asia.
ADNOC Gas expects to pay dividends of $3.25 billion for 2023. It has a production capacity of 10 billion cubic feet a day across eight onshore and offshore sites and a pipeline network of more than 3,250 kilometers (2,020 miles).