ADNOC Record-Breaking Launch of its Gas IPO, Raising $2 Billion in Hours

UAE: Investors jumped at the chance to invest in ADNOC Gas' $2 billion initial public offering, quickly buying up all the available shares and proving that investors still have a strong appetite for Middle Eastern stocks.

Abu Dhabi National Oil Co. (ADNOC) is offering a 4% stake in its subsidiary, Adnoc Gas, with each of the 3.07 billion shares being offered at between 2.25 and 2.43 dirhams. The company has been valued at $50.8 billion if the high-end share pricing is achieved, making it one of the largest gas firms listed on an exchange in the world and placing it just ahead of Eni SpA and Occidental Petroleum Corp.

The highly anticipated initial public offering (IPO) is now fully covered, per an announcement made to investors. Even if priced at the bottom of the range, it was still the biggest IPO so far this year. In order to support the venture, multiple funds - including Alpha Dhabi and International Holding Co., as well as Abu Dhabi state-linked entities - have committed a total of $850 million as cornerstone investors. The order book opened on Thursday morning.

UAE and Saudi Arabia are leading a global IPO surge in 2022, propelled by their efforts to fund an energy transition away from fossil fuels and draw more investors into the markets. The upcoming IPO of Abu Dhabi will be the biggest ever if priced at 2.43 Dirhams, exceeding the record set by chemicals firm Borouge's deal in mid-2022. This is one of many recent stock sales in the Persian Gulf region as governments pursue sustainable development goals.

ADNOC, an Abu Dhabi state-controlled oil and gas company, has transferred 5% of Adnoc Gas to Taqa, a state-controlled power producer in the region. This transfer came before its initial public offering (IPO), raising only $1.67 billion across Europe, the Middle East and Africa year-to-date.

Abu Dhabi National Oil Co. (ADNOC) announced its decision to list ADNOC Gas in late November, and the company was formally created at the start of this year. The tight time frame led Goldman Sachs Group Inc. and Bank of America Corp. to drop out of the deal.

Investors will be able to submit orders for ADNOC Gas until March 1 (retail investors) and March 2. The pricing will be announced on March 3, with trading set to start on March 13.

Abu Dhabi National Oil Company (ADNOC) Gas made record underlying earnings of $8.7 billion in the year through October, a remarkable result driven by soaring gas prices following Russia’s invasion of Ukraine. In response to increased demand for gas from other regions, Europe has turned to the UAE, which recently delivered Germany’s first-ever cargo of liquefied national gas from the Middle East. This shipment signals the UAE’s rising importance as an energy supplier on the global stage.

The United Arab Emirates has the seventh largest natural gas reserves in the world and is planning to triple its liquefied natural gas (LNG) export capacity up to fifteen million tons a year over the upcoming years. ADNOC Gas will be the driving force of this accomplishment.

Despite a mild winter in the northern hemisphere and an ongoing economic slowdown, natural gas prices have stayed historically high in Europe and Asia since August.

ADNOC Gas is anticipated to pay a total of $3.25 billion in dividends for the year 2023. With production capacity that can reach up to 10 billion cubic feet daily across 8 onshore and offshore sites, along with an extensive pipeline network spanning over 3,250 kilometers, ADNOC Gas is setting itself up to be a major player in the energy sector.