ADNOC Gas raises world’s largest IPO to $2.5 billion

Paul Wallace and Julia Fioretti, Bloomberg February 27, 2023

(Bloomberg) — The United Arab Emirates’ main oil company has increased the size of an initial public offering of its gas business — already set to be the world’s largest so far this year — by a quarter to as much as $2.5 billion.

The move comes after investors snapped up all available shares within hours of them going on sale last week. Abu Dhabi National Oil Co. will now offer 3.84 billion shares, or a stake of about 5%, in ADNOC Gas, according to a statement on Monday. It was previously looking to sell 4%.

The price range remains unchanged at 2.25 dirhams ($0.61) to 2.43 dirhams per share. The company will be valued at $50.8 billion at the high end, roughly in line with Occidental Petroleum Corp.

There has been “significant investor demand across all tranches,” ADNOC Gas said.

The UAE and Saudi Arabia experienced an IPO boom last year, bucking a global slowdown thanks to a surge in energy prices following Russia’s invasion of Ukraine.

The units merged to create ADNOC Gas reported record underlying earnings of $8.7 billion in the year through October as gas prices soared when after Moscow’s attack.

Largest IPO in Abu Dhabi’s history

The IPO is set to be 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 Persian Gulf as governments seek to fund a transition away from fossil fuels and bring more international investors into their markets.

ADNOC Gas is taking 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 IPO is 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, Bloomberg News reported.

Prior to the IPO, ADOC transferred 5% of ADNOC Gas to Taqa, a state-controlled power producer in Abu Dhabi.

Several funds, including Abu Dhabi state-linked entities, committed $850 million as cornerstone investors. Among them were Alpha Dhabi and International Holding Co.

ADNOC Gas expects to pay dividends of $3.25 billion for 2023. It has a production capacity of 10 Bcf a day across eight onshore and offshore sites and a pipeline network of more than 3,250 km (2,020 miles).

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.

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