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Adnoc to float 4% of its gas business in IPO

Shares are expected to commence trading on March 13

Adnoc Gas, the Abu Dhabi National Oil Company’s gas processing firm, on Friday announced its intention to float 4 per cent of its issued share capital on the Abu Dhabi Sotck Exchange.

The energy firm’s IPO plans are the latest in a strong of share sales that have boosted the UAE bourses over the past year.

According to a statement, the company intends to offer 3,070,056,880 of its shares to the public. The subscription period is expected to run from February 23 to March 1. The Qualified Investor Offering subscription period, to open on the same day, is expected to run till March 2. Listing is expected on March 13.

Acciording to agency reports, Adnoc has access to 95 per cent of the UAE’s natural gas reserves, the world’s seventh largest. It supplies gas to more than 60 per cent of the local market and exports to more than 20 countries. The company had a net income of $4.2 billion in the first 10 months of 2022, up from $3.6 billion in all of 2021.

Adnoc Gas has a total gas processing capacity of over 10 billion standard cubic feet per day and a liquid processing capacity of 29 million tonnes per year. Adnoc announced the discovery of up to 2 trillion standard cubic feet of gas in an offshore area last year.

Subject to completion of the offering, Adnoc Gas expects to target payment of dividends of $1.625 billion in the fourth quarter of 2023 in respect of the first half of the year ended December 31, 2023; and a further $1.625 billion in the second quarter of 2024 in respect of the second half of the year. Thereafter, Adnoc Gas expects to grow the annual target dividend amount by a growth rate of 5 per cent per annum on a dividend per share basis over the period 2024-2027. “Natural gas is central to the energy transition,” Khaled Al Zaabi, acting group CFO of Adnoc, said in a statement. “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.”

With access to the world’s seventh-largest gas reserves, Adnoc Gas expects to benefit from projected robust, long-term demand globally through its tangible growth opportunities, in view of the projected rise in gas demand in the next 25-30 years.

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Adnoc Gas’ differentiated platform benefits from a combination of low-cost base with rich, largely contracted molecules that mix attractive margins with dependable demand. Through a long-term gas supply and payment agreement with Adnoc, the Adnoc Gas group benefits from one of the lowest-cost upstream resource bases in the world, and is provided a stable flow of feedstock that is rich in NGLs and condensates. Due to Adnoc’s low-cost production relative to the gas production market globally, the Adnoc Gas group’s feedstock is more resilient to commodity price cycles than other upstream operations with higher production and development costs, which contributes to its attractive margins.

All of the Adnoc Gas shares are being offered by Adnoc which, prior to the offering, holds approximately 95 per cent of the share capital of the company. The net proceeds generated by the offering will be received by Adnoc, and all expenses of the offering will be borne by the parent firm. The offering is being conducted, among other reasons, to allow Adnoc to sell part of its shareholding to more actively manage and optimise its portfolio of assets, while providing increased trading liquidity in the shares of the company and raising the company’s profile within the international investment community.

Prior to the offering, Adnoc transferred to Abu Dhabi National Energy Company PJSC (Taqa) approximately 5 per cent of the share capital of the company. Taqa is the holding company for a leading integrated energy and utilities group headquartered in Abu Dhabi and has a long-standing strategic partnership with Adnoc. Adnoc is expected to own approximately 91 per cent of Adnoc Gas’ share capital post-IPO.

Moelis & Company UK LLP DIFC Branch has been appointed as the independent financial advisor to the company.

First Abu Dhabi Bank PJSC and HSBC Bank Middle East Limited have been appointed as joint global coordinators. Abu Dhabi Commercial Bank PJSC, Arqaam Capital Limited, BNP PARIBAS, Deutsche Bank AG, London Branch, EFG-Hermes UAE Limited (acting in conjunction with EFG Hermes UAE LLC) and International Securities L.L.C. have been appointed as joint bookrunners. FAB has been appointed as the lead receiving bank. ADCB, ADIB and Al Maryah Community Bank have been appointed as the receiving banks.