Investors snapped up all available shares within hours of the launch of Adnoc Gas’ $2 billion initial public offering, showing demand for equity sales in the Middle East remains strong.
Abu Dhabi National Oil Co. is selling a 4% stake in Adnoc Gas, with each of the 3.07 billion shares on offer 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 publicly traded gas companies and roughly on a par with Eni SpA and Occidental Petroleum Corp.
It will be the biggest IPO so far this year, even if it is 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 entities linked to the state of Abu Dhabi, committed $850 million as lead investors. Among them were also Alpha Dhabi and International Holding Co.
The IPO will be the biggest ever in Abu Dhabi if it is priced at 2.43 dirhams, beating the deal for chemical firm Borouge in mid-2022. It is the latest in a series of share sales in the Gulf Persian, as governments seek to finance a transition away from fossil fuels and attract more international investors to their markets.
That effort, combined with rising oil and gas prices, helped the UAE and Saudi Arabia weather a global IPO slump in 2022.
Across Europe, the Middle East and Africa so far this year, just $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.
busy schedule
Adnoc only announced the listing at the end of November and formally created the gas unit earlier this year. The tight schedule made Goldman Sachs Group Inc. and Bank of America Corp. abandon the deal, Bloomberg News reported.
First Abu Dhabi Bank PJSC and HSBC Holdings Plc are the lead banks in the IPO.
Adnoc Gas will take orders from retail investors until March 1 and from institutional traders until a day later, with a final price announcement on March 3. Negotiations are expected to begin on March 13.
Gas demand
The units merged to create Adnoc Gas earned record underlying revenue of $8.7 billion in the year to 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 United Arab Emirates is among the countries Europe is eyeing and this month delivered Germany’s first domestic liquefied gas cargo from the Middle East.
The UAE has the seventh largest gas reserves in the world and is seeking to triple its LNG export capacity to around 15 million tonnes per year in the coming years. Adnoc Gas will be at the forefront of this push.
Gas prices have fallen since August due to 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 by 2023. It has a production capacity of 10 billion cubic feet per day at eight onshore and offshore sites and a pipeline network of more than 3,250 kilometers (2,020 miles).
