The Borouge IPO, which has received subscriptions of a staggering $83.4 billion plus, setting up another successful stock market listing in Abu Dhabi Securities Exchange (ADX), will start trading on ADX from June 3.
The subscriptions are 42 times the offer size of $2 billion, as investors – retail and institutional – pile into the mega-offer. This is the second biggest IPO this year after AD Ports Group, which went public on February 8 this year.
Borouge is a joint venture between the Abu Dhabi National Oil Company (ADNOC), which owns 54% stake, and the Austrian petrochemicals giant Borealis ME which has 36% share.
The company operates from a massive industrial complex in Ruwais and will sell 3 billion shares in the public offering.
Borouge has grown into one of the leading petrochemical companies worldwide that make polyolefin solutions since it was established in 1998, supported by its shareholders, ADNOC and Borealis.
Entities such as Abu Dhabi’s International Holding Company, Multiply Group, Alpha Dhabi Holding, ADQ, Abu Dhabi Pension Fund and Emirates Investment Authority are among the blue-chip investors, as is Gautam Adani, the Indian billionaire. They as ‘cornerstone investors’ will hold a combined 28.4%.
These investors will not offer, sell or announce an offer of any shares they have acquired under the cornerstone investment agreements during a period of not less than six months following admission to list on ADX.
The size of the first tranche (reserved for UAE retail and other individual investors) was set at 10%, and that of the second – reserved for local, regional and international qualified institutional investors – was 88%.
A third tranche of two percent was reserved for employees of ADNOC Group companies residing in the UAE, ADP and PTE employees residing in the UAE, employees of Borealis residing in the UAE, and retired UAE nationals from ADNOC, Borealis, and ADP and PTE.
Investors from the first and third tranches will receive an SMS confirmation of their respective allocation on June 2. (Total demand across Tranches 1 and 3 was $17.9 billion, which is more than 74 times oversubscribed.)
Borouge said the investors will be receiving dividends twice each year, including fixed tips of $325 million in September this year and $650 million in March 2023.
The huge demand for Borouge IPO confirms that the UAE’s fundamentals are solid. Moreover, participation from reputed global institutions like Fidelity proves the UAE markets command respect of the global investors.
It may be recalled that even the DEWA IPO had similar participation from global investors and the FTSE ADX has lived up to its reputation as the the seventh best performing country index globally and gained 17.51% in 2022.
Borouge manufactures polyolefin solutions, which are expected to see a rise in demand and it offers an almost 5% dividend yield, which is attractive for income investors.