UAE: Adnoc Gas shares surge 19% on ADX debut

The shares of Adnoc Gas surged 19 per cent in their first day of trading on Monday in a $2.5 billion initial public offering that aims to tap into growing demand for the fuel.

Adnoc Gas, a subsidiary of energy giant Abu Dhabi National Oil Company (Adnoc), climbed as high as Dh2.97 ($0.80) in the early trading from its launch price of Dh2.37. However, it closed at Dh2.81 ($0.77).

The company’s market capital rose from Dh181.9 billion to Dh215.6 billion by the end of Monday’s trading session, closing at Dh2.81 per share, an increase of 18.6 per cent compared to the final offering price. It is the fifth subsidiary of Adnoc to list on the second-biggest Arab stock market and boosting its market capitalisation to Dh2.88 trillion from D2.702 trillion by the end of the last trading session on Friday.

The shares, which started trading on the ADX under the ticker symbol ‘ADNOCGAS’, later consolidated its position and dropped to Dh2.83 in the final trading hours. It is the biggest flotation yet on the ADX after raising Dh9.1 billion ($2.5 billion), overtaking Borouge that went public in June 2022 and raised Dh7.34 billion ($2 billion).

Mohamed Fahmi, EFG Hermes’ co-head of Investment Banking, said Adnoc Gas comes on the heels of several landmark deals our investment banking division has advised on for the integrated energy solutions provider Adnoc.

"We previously concluded advisory on Adnoc Drilling’s $1.1 billion and Fertiglobe’s $795 million IPOs in 2021, as well as Borouge’s $2.0 billion IPO in 2022," he said.

"We continue to strengthen our presence in the GCC as we ramp up our pipeline of prominent equity transactions across the region’s largest exchange a testament to our unwavering efforts to capture the rising demand in the region and bring quality, value-generating investment prospects to local and global investors,” Fahmi said.

“Demand for the stock was expected to remain strong after listing with the favourable pricing,” Monica Malik, chief economist at UAE bank ADCB, told AFP.

High dividends guaranteed

At more than 50 times oversubscribed, it was the biggest demand ever seen for an initial public offering in the Middle East and North Africa, outstripping oil firm Saudi Aramco’s world-record Dh107.89 billion ($29.4 billion) listing just over three years ago.

The company is targeting to pay dividends of Dh5.96 billion ($1.625 billion) in the fourth quarter of 2023 for the first half of the year ended December 31, 2023 and a further Dh5.96 billion ($1.625 billion) in the second quarter of 2024 for the second half of the year ended December 31, 2023.

Thereafter, the company expects to grow its annual target dividend amount from Dh11.92 billion ($3.25 billion) — which is equal to the annualised dividend for the year ended December 31, 2023 by a growth rate of five per cent per annum on a dividend per share basis over the period 2024-27.

Strong IPO

Hisham Khalid Malak, chairman of ADX, said the Abu Dhabi capital market has remained highly active, building on the strong IPO and listing momentum garnered over 2022, despite the muted global outlook.

“With the UAE and Emirate positioned firmly on the global investment map, ADX continues to attract record levels of interest and demand from institutional and international investors. Adnoc Gas’ highly successful IPO is not only testament to the company’s strong growth and value proposition, but also speaks to the strong confidence in the Emirate’s robust market fundamentals and status as a premier investment destination,” Malak said.

Looking ahead, he said ADX continues to be buoyed by a strong pipeline of listings that will serve to strengthen and broaden its offering, enhance its central role in supporting the UAE’s economic growth and ability to attract institutional capital and foreign direct investment.

Unprecedented demand

Speaking at the opening bell-ringing ceremony, Fatema Al Nuaimi, Adnoc Gas board director and EVP Downstream Business Management at Adnoc, said demand for the Adnoc Gas IPO – the largest IPO globally to date this year – has been unprecedented, drawing record demand from retail investors as well as local and global institutional investors.

“The level of interest received in the UAE and abroad demonstrates a very clear and well-understood track-record of performance at Adnoc Gas and, more importantly, a confidence that the company is well-positioned to capitalise on future growth, delivered in a sustainable manner,” Al Nuaimi said.

A new milestone

Adnoc Gas, which only became operational at the start of this year, launched its IPO last month. It was heavily oversubscribed even after it was expanded from four per cent to five per cent of issued share capital in response to strong interest, valuing the company at Dh183.5 billion ($50 billion) approximately.

The IPO witnessed the strongest demand ever for an IPO in the UAE, with total demand across all segments being more than Dh450 billion, exceeding the target value by around 50-fold. Adnoc retains a 90 per cent stake in the subsidiary formed from its former gas processing, LNG and industrial gas units.

“This milestone has been made possible by the unwavering dedication and commitment of our people across Adnoc Gas. Their focus on continually delivering for our customers has resulted in stellar financial and operational performance thus far, which investors clearly appreciate,” Ahmed Alebri, acting chief executive officer of Adnoc Gas, said.

“As Adnoc Gas moves into life as a listed company, we remain focused on our clear growth strategy, underpinned by upstream capacity expansion, which will allow us to process and deliver increased volumes to customers, further enhancement of our product mix and ensuring we deliver for our growing number of international customers as demand for gas continues to increase,” he said.

ADX welcomes Adnoc Gas

Saeed Hamad Al Dhaheri, managing director and chief executive officer of ADX, said ADX continues to showcase its ability to deliver value as both a leading market for issuers and a global destination for investor capital.

“By welcoming the world’s largest IPO this year to our platform – and ADX’s largest-ever IPO – we continue to demonstrate our ability to attract top-tier issuers, providing them with a transparent and dynamic platform through which they can catalyse their growth,” he said.

He said the oversubscription and extremely high demand witnessed – as was the case with numerous previous IPOs on ADX – reflects “our ongoing efforts to provide regional and international investors” with unique investment opportunities and participate in the growth journey of key UAE sectors.

More IPOs are coming

Analysts and market experts said Adnoc Gas could be the first in a series of share offerings in Abu Dhabi this year.

“At least eight companies are expected to follow in fields ranging from technology to asset management and regenerative medicine,” according to Bloomberg, citing Sameh Al Qubaisi, director-general of economic affairs at Abu Dhabi’s Department of Economic Development.

The UAE is among the top 10 gas producers of the world and Adnoc Gas has access to 95 per cent of the country’s natural gas reserves. It supplies more than 60 per cent of the UAE's gas needs and spending heavily on its infrastructure to boost its production capacity.

— muzaffarrizvi@khaleejtimes.com

READ MORE:

• UAE: Adnoc sets IPO price at Dh2.25 to Dh2.43; could raise up to $2 billion

• UAE: Adnoc sets IPO price at Dh2.25 to Dh2.43; could raise up to $2 billion

• Adnoc Gas raises stake sale to 5% on high investor demand

• UAE: Adnoc Gas prices IPO at Dh2.37 per share

• UAE: More IPOs are in the pipeline after the success of Adnoc Gas

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