Adnoc Logistics & Services drew orders worth $125 billion for its $769 million initial public offering in Abu Dhabi, as investors flocked to the share sale amid a dearth in deals in other regions.
(Bloomberg) — Adnoc Logistics & Services drew orders worth $125 billion for its $769 million initial public offering in Abu Dhabi, as investors flocked to the share sale amid a dearth in deals in 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 on Thursday. That values the company at $4.05 billion.
The demand for the IPO is the highest globally this year and implies an oversubscription level of 163 times in aggregate, Adnoc said.
The size of the float had already been increased by over a quarter on strong investor demand. That’s been a recurring theme in Middle Eastern IPOs, which have stood out against a global slump in listings, as high oil prices buoy the region.
State-owned Adnoc raised $2.5 billion earlier this year from the listing of its gas business, a deal that was also increased in size and ended up pulling in $124 billion in orders. Investors have been drawn to the region’s IPOs by high dividend yields, which are attractive in a rising interest rate environment.
Still, proceeds from IPOs in the Middle East have dropped 69% from the same period a year ago and stand at $3.5 billion, data compiled by Bloomberg show, indicating it’s not immune from the global slowdown. However, the region has largely escaped the poor performance seen in European IPOs, where many of the larger deals are under water.
Diversifying Economy
Adnoc has been selling stakes in its units since about 2017 to help fund diversification of the economy and reduce its reliance on fossil fuels. It listed chemicals firm Borouge last year and has previously sold shares in its drilling unit and fertilizer company Fertiglobe, among others.
Adnoc L&S plans to pay an annualized 2023 cash dividend of $260 million and expects to increase this by at least 5% annually. The firm, which has been expanding its fleet to cope with increased demand from the state-owned firm’s businesses, is targeting capital expenditure 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 subscribe for 23.4% of the offering as cornerstone investors.
Shares in Adnoc L&S are due to start trading on June 1.
Citigroup Inc, First Abu Dhabi Bank PJSC, HSBC Holdings Plc and JPMorgan Chase & Co. were joint global coordinators on the Adnoc L&S IPO.
–With assistance from Omar Tamo.
(Updates with oversubscription level in 3rd paragraph, cornerstones in 9th paragraph)
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