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The landmark initial public offering by a unit of one of the world's largest oil companies, Abu Dhabi National Oil Company (Adnoc), is drawing overwhelming investor response with the market continuing to show healthy appetite for the IPO.
Adnoc Distribution unit set an indicative price range of between Dh2.35 and Dh2.95 for its IPO that could raise as much as $2 billion to become a milestone transaction, the largest public offering in the UAE to date. Adnoc is selling a minimum of 10 per cent, or 1.25 billion shares, and a maximum of 20 per cent, or 2.5 billion shares, in the IPO of its distribution unit.
At the top of the price range, the deal could be valued at Dh7.375 billion, assuming it sells a maximum 20 per cent. That would make it the biggest IPO in the UAE since 2007 when DP World raised nearly $5 billion, according to analysts' data.
The last date for subscription for the first tranche will be on December 6, and December 7 for the second tranche. The listing will take place on the Abu Dhabi Securities Exchange on December 13.
The planned Adnoc unit listing comes ahead of Saudi Aramco's 2018 IPO, billed as the world's biggest. The IPO that will float five per cent of Aramco, will value the world's largest oil company at a minimum of $2 trillion and could raise as much as $100 billion.
Abu Dhabi is pushing its state companies to float on the bourse, hoping to lure foreign investors with privatizations after a fall in oil prices since mid-2014 depleted its coffers.
The Adnoc unit's total market value could be between $8 billion to $10 billion.
First Abu Dhabi Bank (FAB) is the lead arranger for this transaction and the sole local bank involved.
André Sayegh, FAB's deputy group CEO and head of corporate and investment banking, said there is a clear interest in the market for the IPO, due to the long-established history that ADNOC has built and the high level of trust it reaps in the market.
"This public offering is a milestone, not only for the company, but for the market and the UAE's economy as a whole. In line with the country's ambitions to enhance the participation of the private sector in the economy, and to further support economic diversification efforts, this IPO also offers investors a secure investment opportunity that is competitively priced and that will provide them with healthy returns in the medium and long-term," said Sayegh.
"The market is exhibiting healthy liquidity levels and this is an ideal investment opportunity for individual and institutional investors, and will add significant value to the UAE's economy."
Adnoc will be investing Dh400 billion over the next five years in exploration, development and production of oil and gas and petrochemicals projects to enhance growth opportunities.
The strategy was approved by the Supreme Petroleum Council (SPC) headed by His Highness Sheikh Mohammad bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces.
The council also approved Adnoc's plans for the exploration, assessment and development of unconventional gas resources as the company seeks to enable future value-creation from its untapped gas resources.
It also gave the green light to Adnoc to pursue international downstream investments that will position the company as a global player in the downstream market, a statement on Wam said.
Adnoc's CEO Dr Sultan bin Ahmed Al Jaber said in the statement that the IPO's price range was compelling and it was an attractive dividend prospect. Investors are getting a unique opportunity to invest in the UAE's number one fuel retail brand, he said.
- issacjohn@khaleejtimes.com
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