The Abu Dhabi National Oil Company (Adnoc) is seeking to raise up to $2bn (€1.7bn) from the initial public offering of its fuel-retailing unit in a flotation that could be the biggest in the United Arab Emirates in 10 years.
The crude producer will price the shares of Abu Dhabi National Oil Company for Distribution PJSC in a range of 2.35 dirhams to 2.95 dirhams, according to an advertisement published in Gulf News. Based on that price range and a planned sale of 10% to 20% of the company, the distribution business is valued at $8bn-$10bn.
Flotation activity in the UAE is showing signs of picking up after only two deals were completed throughout 2015 and 2016. Emaar Properties raised $1.3bn from the sale of shares in its development unit earlier this month, while Mubadala Investment Company expects to float its Emirates Global Aluminium unit next year.
“This is the first real petroleum-linked issue that has come to the market. That’s huge, given that really this region is all about oil,” Salman Bajwa, chief executive of Emirates NBD Asset Management, said.
“The appetite that we have seen among investors, among the retail investors as well as institutions, is huge.”
Raising $2bn would make the Adnoc Distribution share sale the biggest in the UAE since Dubai ports operator DP World brought in $5bn in 2007. according to data compiled by Bloomberg.
Adnoc, which pumps most of the crude in the UAE, plans to announce the final offer size and pricing on December 8, with the stock expected to begin trading on December 13 in Abu Dhabi. The final value of the flotation could be more in the range of $1bn to $1.5bn, according sources. The company said last week it plans to offer 1.25 billion-2.5 billion shares. The potential $8bn to $10bn valuation Adnoc Distribution could achieve is at the lower end of a range estimated earlier this year. The company could be worth $10bn to $14bn, sources said in July.
Adnoc Distribution operates 360 service stations in the country except in Dubai. The company plans to expand next year into Dubai and Saudi Arabia.