ADNOC’s distribution unit sets price range for Abu Dhabi initial public offering

Abu Dhabi National Oil Co’s (ADNOC) unit set an indicative price range for its initial public offering (IPO) that could raise as much as $2 billion to become the biggest listing in the UAE since 2007.
ADNOC Distribution set an indicative price range of between Dh2.35 dirham (SR2.40) and Dh2.95, it said in a statement on Sunday.
ADNOC is selling a minimum of 10 percent, or 1.25 billion shares, and a maximum of 20 percent, or 2.5 billion shares, in the IPO of its unit.
At the top of the price range, the deal could be valued at Dh7.375 billion, assuming it sells a maximum 20 percent.
That would make it the biggest IPO in the UAE since 2007 when DP World raised nearly $5 billion, according to Thomson Reuters data.
The planned listing comes as 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 unit’s total market value could be between $8 billion and $10 billion.
Analysts had earlier valued the total fuel distribution unit at between $11 billion and $14 billion in reports prepared by banks advising the firm on the planned listing, sources had told Reuters earlier.
The company valuation implies a 2018 dividend yield of 6 percent to 7.5 percent and a 2019 dividend yield of 4 percent to 5 percent.
ADNOC’s CEO Sultan 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.
Under his leadership, ADNOC has embarked on a major shake-up plan to privatize its services businesses, venture into oil trading and expand partnerships with strategic investors.
ADNOC Distribution is the leading fuel distributor in the UAE, with a market share of around 67 percent in the country by number of retail fuel service stations.
Abu Dhabi’s national oil company earlier this month unveiled details of ADNOC Distribution’s listing, as Gulf states step up plans to privatize energy assets in an era of cheap oil.
Saudi Arabia plans to list 5 percent of Aramco by the end of next year, which Saudi officials say could raise $100 billion, making it the world’s biggest IPO.
Citigroup, First Abu Dhabi Bank, HSBC and Bank of America Merrill Lynch are joint global coordinators for the ADNOC unit’s offer and bookrunners alongside EFG Hermes, Goldman Sachs and Morgan Stanley. Rothschild is the sole financial adviser.

Source:Arabnews