Adnoc raising bets on IPO

The primary oil company of the United Arab Emirates has raised the scale of an IPO of its gas sector. The gas business was initially expected to be the biggest ever this year by a quarter to a whopping $2.5 billion.

Investors purchased all available shares within hours of them being on sale last week. On Monday, Abu Dhabi National Oil Co announced plans to put 3.84 billion shares, equating to a 5% stake in Adnoc Gas, up for auction. This is higher than the initial 4% listed for sale.

The price range is still set at 2.25 to 2.43 dirhams ($0.61 to 2.43) per share. At its highest estimate, the business will be worth $50.8 billion, almost on par with Occidental Petroleum Corp. 

Due to an increase in energy prices following Russia’s invasion of Ukraine, the UAE and Saudi Arabia saw a boom in initial public offerings (IPOs) last year. This aided in defying a worldwide slowdown.

Although gas prices spiked following Moscow’s attack, the businesses that combined to form Adnoc Gas reported record underlying earnings of $8.7 billion in the year until October.

The IPO is predicted to surpass chemicals manufacturer Borouge’s $2 billion transaction in mid-2022 as the largest ever in Abu Dhabi. It is the most recent in a string of stock offerings that have taken place in the Persian Gulf. Governments are looking to step away from fossil fuels and attract more foreign investors to their markets.

What’s on the horizon for the IPO?

The IPO is coming along a lot faster than anticipated. Adnoc only revealed the listing in late November and formally established the gas company at the start of this year. According to Bloomberg News, Goldman Sachs Group Inc and Bank of America Corp, abandoned the deal because of the tight timeline.

Adnoc ceded 5% of Adnoc Gas to Taqa (TAQA), an Abu Dhabi-based state-controlled power generator, prior to the IPO.

A number of funds, including companies connected to the Abu Dhabi government, pledged $850 million as cornerstone investors. Alpha Dhabi and International Holding Co were two of them.

For 2023, Adnoc Gas anticipates paying $3.25 billion in dividends. It has a pipeline network of more than 3,250 kilometers. Moreover, it has a production capacity of 10 billion cubic feet per day over eight onshore and offshore facilities.