The initial public offering of Adnoc Logistics & Services drew enough orders to cover all shares within minutes, showing continued strong demand for listings in the Middle East.
Abu Dhabi National Oil Co. is selling about 1.11 billion shares of its maritime logistics unit at 1.99 dirhams ($0.54) to 2.01 dirhams each, valuing the company at up to $4.05 billion, according to a statement Tuesday.
Order books for the IPO, which could raise as much as $607 million at the top end, were filled across the range, indicating that demand outstripped the size of the offer, according to a message to investors seen by Bloomberg News.
Al Seer Marine Supplies & Equipment Co PJSC, National Marine Dredging Co PJSC, Alpha Oryx Ltd., ultimately owned by Abu Dhabi wealth fund ADQ, and Abu Dhabi Pension Fund have committed to becoming investors fundamental and have underwritten about 180 million dollars together.
The deal is state-owned Adnoc’s second unit listing this year, after it raised $2.5 billion in the IPO of its gas business in March. It is also expected to be the second largest IPO in the Middle East so far this year.
Revenue from initial public offerings in the Middle East fell 69% from the same period a year ago to $3.5 billion, according to data compiled by Bloomberg. Falling oil prices and concerns about slower global economic growth have weighed on the market, with the MSCI GCC Countries index down nearly 17% in the past year.
Still, the Middle East is doing much better than other regions like Europe, where IPOs are still struggling to get off the ground. Abu Dhabi has so far dominated listing activity in the Gulf, mainly thanks to the IPO of Adnoc Gas, while Saudi Arabia has been quiet and Dubai has not seen any of the major privatizations that have busy last year.
Adnoc has been selling stakes in its units since about 2017 as part of a strategy to help finance the diversification of the economy and reduce its reliance on fossil fuels. Last year it listed chemical company Borouge and has already sold shares in its drilling unit and fertilizer company Fertiglobe, among others.
Adnoc L&S plans to pay an annualized cash dividend in 2023 of $260 million and expects to increase it by at least 5% annually. The company, which has been expanding its fleet to meet increased demand from state-owned enterprises, is targeting capital spending of $4 billion to $5 billion in the medium term.
It also plans a compound annual growth rate of at least 10% for its income over the medium term.
The institutional book creation period extends until May 24th, with the price set for May 25th. The retail offer will close on May 23, while shares are expected to begin trading on June 1.
Citigroup Inc, First Abu Dhabi Bank PJSC, HSBC Holdings Plc and JPMorgan Chase & Co. joint global coordinators and joint book directors have been appointed. Abu Dhabi Commercial Bank PJSC, Arqaam Capital Limited, Credit Agricole SA, EFG-Hermes, International Securities and Societe Generale SA are joint brokers for the offering.
Moelis & Co. is the independent financial advisor.
