ADNOC to sell 10% of retail arm in IPO

Abu Dhabi

ABU DHABI, November 13, 2017 – ADNOC will sell at least 10% of its fuel station subsidiary, ADNOC Distribution, on the Abu Dhabi Securities Exchange, the company announced Monday.

The offering is set go forward following regulatory approvals from the UAE Securities and Commodities Authority and Abu Dhabi Securities Exchange.

“This marks a major milestone in our history and a significant step-change in our transformation. Importantly, it also signals a new chapter in the growth and development of the UAE’s capital markets. But to be clear, ADNOC at a holding company level will always remain wholly owned by the Abu Dhabi government,” Sultan Ahmed Al Jaber, UAE minister of state and ADNOC Group CEO, announced at the Abu Dhabi International Petroleum Exhibition and Conference.

ADNOC is on track to achieve its production capacity goal of 3.5 million bopd and had cut drilling time by 30%, Al Jaber said, adding that more than 10 companies had expressed interest in upcoming offshore concessions. The company aims to develop additional gas reservoirs and scale up sour gas production, he said. The CEO also spoke about ADNOC’s goal to increase refining capacity by 60% and petrochemicals production by 300%, saying the Ruwais facility will allow the company to convert about 20% of its crude into added-value products.

In July 2017, ADNOC reportedly selected First Abu Dhabi Bank, HSBC, Bank of America, Merrill Lynch and Citigroup to manage the IPO of its retail business, which is expected to bring in between USD 1.5 billion and USD 2 billion. Rothschild has reportedly been selected as adviser for the floatation of ADNOC Distribution, though all the parties involved declined to comment.

Last week, Abu Dhabi Crude Oil Pipeline issued and closed a USD 3-billion bond. ADNOC has been looking at diversifying its fundraising sources as low oil prices have decreased government funding for the NOC. It plans to sell minority stakes in some of its services companies through IPOs on local equity markets over the next few months.

Investment is expected from both regional and international – especially Asian – sources. ADNOC has said shares of the group holding will not be sold, but it is looking to form partnerships with institutions including large trading houses, pension funds, private equity investors and infrastructure specialists as well as NOCs and IOCs. The company expects these partners to assist it with market access, technology and knowledge transfer, and capital.

“At ADNOC, we are embracing the future to create a new type of national oil company that meets the needs of today, while adapting to secure tomorrow’s success,” Al Jaber said. “To achieve this, we have set out to transform the fundamentals of our business. We have expanded our approach to partnerships, enhanced our capital structure, to more efficiently finance our business, and revised the way we manage our portfolio of assets to unlock lasting value.”

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