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Adnoc completes $1b placement for subsidiary

Issac John /Dubai
issacjohn@khaleejtimes.com Filed on September 14, 2020

(Reuters)

Adnoc will retain an 80 per cent strategic stake in Adnoc Distribution

Abu Dhabi National Oil Company (Adnoc) said on Monday that it had completed a placement to institutional investors of 10 per cent in its subsidiary Adnoc Distribution's total share capital, or 1.25 billion shares valued at $1 billion.

The placement will increase Adnoc Distribution's free float to 20 per cent, and contribute to improved liquidity of the company, the state-run oil major said in a statement.

Following the transaction, which represents "the largest block placement of a publicly listed" company in the Gulf region, Adnoc will retain an 80 per cent strategic stake in Adnoc Distribution and continues to see strong growth potential in the company, it added.

In 2017, Adnoc listed 10 per cent of its distribution subsidiary, the largest operator of petrol stations and convenience stores in the UAE, on the Abu Dhabi Securities Exchange.

Dr. Sultan Ahmed Al Jaber, Adnoc Group CEO, said the transaction highlights the attractive nature of Adnoc Distribution to investors. "We saw significant investor demand in Adnoc Distribution shares and quickly and efficiently responded through an institutional placement."

Citigroup Global Markets and First Abu Dhabi Bank acted as joint bookrunners on the transaction. Moelis & Company acted as independent financial advisor to Adnoc. Adnoc had been considering selling a bigger stake in its fuel distribution business, including a secondary listing overseas, after the initial public offering in 2017.

On Monday, Adnoc said the placement was priced at Dh2.95 per share, which is 18 per cent above the IPO price of Dh2.50 and represents a 5.0 per cent discount to the company's three-month volume weighted average price.

"For the investors, it presented a unique opportunity to access a sizeable stake in Adnoc Distribution ... with an attractive and resilient dividend policy."

Last month, Adnoc Distribution said its 2020 dividend policy would continue with an increase of 7.5 per cent to Dh2.57 billion.

Four years ago, Adnoc started a transformation strategy to adapt more quickly to market changes, and the company has said it will continue to work with investors to attract foreign capital and maximise value from its resources. Since then, it entered the debt capital markets for the first time, issuing a $3 billion bond backed by the Abu Dhabi Crude Oil Pipeline; partially floated Adnoc Distribution on the ADX, and entered into several strategic partnerships in its drilling, refining, fertilizer and trading businesses, amongst others.

Recently, Adnoc also closed landmark investment partnerships with leading global institutional investors and operators in both its oil and gas pipeline infrastructure and its real estate infrastructure. The company is returning to the capital markets with this placement.

issacjohn@khlaeejtimes.com

author

Issac John

Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.


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