ADNOC plans IPO, to raise $2 billion

ADNOC, the UAE’s national energy company, is planning to sell about 4% of its natural-gas business in an initial public offering IPO) and hopes to raise $2 billion from the proceeds.

ADNOC will offer more than 3 billion shares in ADNOC Gas, one of the world’s largest gas-processing entities, on the Abu Dhabi Securities Exchange (ADX) on Feb 23. Shares are expected to begin trading on March 13, the company said on Friday.

ADNOC formed ADNOC Gas in November last year by merging the operations, maintenance and marketing of ADNOC Gas Processing and ADNOC LNG into one consolidated entity and the new company began operations on January 1.

Abu Dhabi expects natural gas as an important part of the future energy mix with renewables and nuclear soon. ADNOC will still own about 91% of the shares, all of which will have been paid in full after the IPO. Abu Dhabi National Energy Co (ADNEC) or TAQA will own approximately 5%.

The company has already listed several its subsidiaries over the past couple of years including Fertiglobe, its petrochemicals company Borouge and ADNOC Drilling.

The selling shareholder can increase the size of the public offering at any time before pricing of the deal, ADNOC said. The offer price will be “determined based on the offer price range,” and will be announced on the first day of the offer period, for the first and second tranches.

The offer period for retail investors, including individuals, ADNOC employees residing in the UAE and Emiratis who retired from the group and who live in the country, will close on March 1. The second tranche for qualified investors is expected to close a day after.

ADNOC Gas said that it will pay $3.25 billion in dividends for 2023, split in two instalments. It intends to increase the annual dividend amount by 5% from 2024 to 2027, the company said.

Fifth Time

Khaled Al Zaabi, Adnoc’s acting group chief financial officer said that this was the fifth time where they were bringing an ADNOC company to the market in as many years. “We are delighted to, once again, offer international and local investors a highly compelling investment opportunity,” he said.

“Natural gas is central to the energy transition and, as the UAE’s gas champion, ADNOC Gas is well positioned to responsibly harness our significant natural gas resources while driving efficiencies, delivering value and reliably supplying this key fuel to meet the world’s growing energy needs,” Al Zaabi added.

ADNOC Gas has access to 95% of the UAE’s natural gas reserves, estimated to be the seventh largest globally. The company also supplies more than 60% of the UAE’s gas needs, according to its IPO prospectus.

“With gas demand expected to increase over the coming years, the ADNOC Gas group is focused on increasing its production capacity to maximise output in order to benefit from Adnoc Group’s 2030 integrated strategy, which includes increasing capacity of gas and low carbon/renewable energy production as part of its accelerated growth strategy,” the company said.