Adnoc Logistics & Services won $125 billion worth of orders for its $769 million initial public offering in Abu Dhabi as investors flocked to sell shares amid a dearth of deals to other regions.
Abu Dhabi National Oil Co. sold 1.41 billion shares — or a 19% stake — in its maritime logistics unit at 2.01 dirhams each, the top of a narrow range that started at 1.99 dirhams, according to a statement from the Thursday. This values the company at $4.05 billion.
The demand for the IPO is the highest in the world this year and involves a level of oversubscription of 163 times in aggregate, Adnoc said.
The float size had already increased by more than a quarter due to strong demand from investors. This has been a recurring theme in IPOs in the Middle East, which have stood out against a global drop in prices as high oil prices boost the region.
State-owned Adnoc raised $2.5 billion earlier this year from the listing of its gas business, a deal that also increased in size and ended up with $124 billion in orders. Investors have been attracted to the region’s IPOs by high dividend yields, which are attractive in a rising interest rate environment.
Still, revenue from IPOs in the Middle East has fallen 69% from the same period a year ago to $3.5 billion, data compiled by Bloomberg show, indicating it is not immune to the global slowdown. However, the region has largely escaped the poor performance seen in European IPOs, where many of the largest deals are underwater.
Diversification of the economy
Adnoc has been selling stakes in its units since about 2017 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.
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 will underwrite 23.4% of the offering as lead investors.
Adnoc L&S shares will start trading on June 1.
Citigroup Inc, First Abu Dhabi Bank PJSC, HSBC Holdings Plc and JPMorgan Chase & Co. were joint global coordinators of Adnoc L&S’s IPO.
–With the assistance of Omar Tamo.
