Adnoc Gas $2 Billion IPO Covered in Hours as Investors Pile In

Investors snapped up all of the shares on offer in Abu Dhabi National Oil Co.’s natural gas business within hours after the initial public offering kicked off, showing that demand for Middle East share sales continues to remain strong, Bloomberg reported.

Adnoc Gas’ initial public offering order book was fully covered, according to a message sent to investors and seen by Bloomberg. Several funds, including Abu Dhabi state-linked entities, have committed $850 million as cornerstone investors. Among them are also Alpha Dhabi and International Holding Co.

The United Arab Emirates’ national oil company is seeking to raise as much as $2 billion from its gas business in what is set to be the biggest IPO so far this year. Abu Dhabi National Oil Co. is selling a 4% stake in Adnoc Gas, with each of the 3.07 billion shares being offered at between 2.25 and 2.43 dirhams (66 cents).

At the top of the range the company will be valued at $50.8 billion, making it one of the world’s largest listed gas firms and roughly on a par with Eni SpA and Occidental Petroleum Corp.

The IPO will be the biggest-ever in Abu Dhabi at the top end of the range, pipping chemicals firm Borouge’s deal in mid-2022. It’s the latest in a series of stock sales in the Persian Gulf as governments seek to fund a transition away from fossil fuels and bring more international investors into their markets.

That effort, combined with surging oil and gas prices, helped the UAE and Saudi Arabia buck a global IPO slump in 2022.

In all of Europe, the Middle East and Africa so far this year, only $1.67 billion has been raised through IPOs, data compiled by Bloomberg show.

Prior to the IPO, Adnoc transferred 5% of Adnoc Gas to Abu Dhabi-based Taqa, the biggest power producer in the UAE.

Tight Schedule

Adnoc only announced the IPO in late November and formally created the gas unit at the beginning of this year. The tight IPO schedule led to Goldman Sachs Group Inc. and Bank of America Corp. dropping off the deal, Bloomberg News reported.

First Abu Dhabi Bank PJSC and HSBC Holdings Plc are the lead banks on the listing.

Adnoc Gas will take orders from retail investors until March 1 and from institutional traders until a day later, with a final pricing announcement on March 3. Trading is expected to start on March 13.

Gas Demand

The units merged to create Adnoc Gas generated record underlying earnings of $8.7 billion in the year through October. The strong performance came as gas prices soared after Moscow’s invasion of Ukraine and Europe rushed to secure supplies from outside of Russia.

The UAE is among the countries Europe is looking to, and this month it delivered Germany’s first-ever cargo of liquefied national gas from the Middle East.

Gas prices have slumped since August, but are still at historically-high levels in Europe and Asia.

Adnoc Gas has said it expects to pay dividends of $3.25 billion for 2023. It has a production capacity of 10 billion cubic feet a day across eight onshore and offshore sites and a pipeline network of more than 3,250 kilometers (2,020 miles).

The UAE has the world’s seventh largest gas reserves and is seeking to triple its LNG export capacity to about 15 million tons annually in the next few years.