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NMDC Energy shares fall on market debut, but outlook remains strong

Shares still up 8% on offer price, making it the UAE's biggest IPO this year

The shares of NMDC Energy, a unit of NMDC Group, a conglomerate that operates in engineering, procurement, construction, and marine dredging, fell around nine per cent from their opening price upon listing on the Abu Dhabi Exchange (ADX) on Wednesday.

However, Wednesday’s closing price of Dh3.02 still representing an eight per cent gain on the IPO’s offer price of Dh2.80. The company offered over 1.15 billion shares at Dh2.8 per share and raised around Dh3.22 billion, making it the largest IPO of 2024. Dh88 billion was demanded for the sale, which was oversubscribed by 31.3 times.

NMDC Energy’s shares opened at Dh3.35, briefly rising to Dh3.40 before falling to Dh3.02 at the close of trade. “This share price loss is primarily due to investor concerns about lowering oil prices and profit-taking activity, as other UAE energy equities suffered the more significant impact of declining oil prices. Abu Dhabi National Energy Co.’s stock dropped 1.12 per cent, while Adnoc Drilling fell 1.75 per cent. “Despite short-term volatility, NMDC Energy’s long-term outlook remains positive. The company provides engineering, procurement, and construction services for the oil and gas industry. However, it is not directly involved in oil drilling, protecting it from price swings. Additionally, the Middle East’s growing population and the demand for oil and gas, which powers 95 per cent of its electricity generation, underpin long-term stability in the energy sector, further supporting NMDC Energy’s prospects,” Vijay Valecha, Chief Investment Officer, Century Financial, told Khaleej Times

On Wednesday, Mohamed Hamad Ghanem Hamad Almehairi, Chairman of NMDC Energy, led the ADX bell ringing ceremony and officially opened the market. The event was attended by NMDC Group chairman Mohamed Thani Murshid Al Rumaithi, along with members of the board of directors of NMDC Group and NMDC Energy. The offering of 1.15 billion shares in NMDC Energy, representing 23 per cent of the total share capital, was made available to eligible investors at Dh2.8 per share. Final allocations were approximately 0.17 per cent to retail investors and six per cent to professional investors.

Almehairi said: “NMDC Energy’s listing is an exceptional achievement that will define the pace for the sector’s engineering, procurement and construction business in Abu Dhabi and beyond. To meet the future demands of the energy sector, we will continue to collaborate with value-add partners that share our forward-thinking mentality. Together, we will keep pushing forward with an unstoppable momentum.”

Yasser Zaghloul, Group CEO of NMDC, said: “Today is a historic day for NMDC Energy, our Group, and the UAE, and it is one that lays the foundation more great things to come. NMDC’s IPO opens trading today after drawing Dh88 billion in investment locally, regionally, and internationally. On behalf of everyone at our Group, I would like to thank ADX for the opportunity to make history, and I am proud that that today we are a visible example of the Abu Dhabi vision becoming reality.”

Ahmed Al Dhaheri, CEO of NMDC Energy, said: “The success of the NMDC Energy IPO reflects the confidence that the investment community has in our business. They understand the story of NMDC Energy and see immense value in our business, past, present and future. Our IPO listing speaks to a wider shift in our business and in our industry where NMDC Energy is now firmly positioned to have a stake in the energy sector of the future. I would like to personally welcome our investors onboard this new growth journey for NMDC Energy, as it charts an exciting path forward for Abu Dhabi.”

International Securities LLC was the placement agent and listing adviser. First Abu Dhabi Bank PJSC acted as lead receiving bank and lead manager for the IPO. Abu Dhabi Commercial Bank PJSC, WIO Bank PJSC, and Al Maryah Community Bank LLC were other receiving banks. Hadef & Partners were the legal advisors.

For 50 years, NMDC Energy has provided integrated engineering, procurement, and construction solutions to the energy sector. The company’s Abu Dhabi manufacturing facilities cover 1.3 million sqm, and it is also developing a new 400,000 sqm manufacturing facility at Ras Al Khair Port in Saudi Arabia. As of 30 June 2024, NMDC Energy’s backlog was valued at approximately Dh54 billion, with its diverse international portfolio including a strong presence in the UAE, Saudi Arabia, Kuwait, India and Taiwan.

NMDC Group is backed by Alpha Dhabi Holding, a fast-growing investment company in the Middle East and a subsidiary of International Holding Company (IHC).

Though oil’s proportion to GDP is predicted to decline as diversification efforts continue, demand for domestic oil and gas is expected to stay stable due to economic development and population expansion, Valecha said. “Furthermore, with natural gas and petroleum supplying nearly all of the region’s energy and increased demand for cooling and desalination due to extreme weather conditions, NMDC Energy’s prognosis remains optimistic despite the brief drop in share price,” he added.