UAE Oil Producer Adnoc Plans to Sell 7.5% Stake in Drilling Unit


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(Bloomberg) — Abu Dhabi National Oil Co. is planning to sell shares in its drilling unit in what would rank among the largest initial public offerings in the United Arab Emirates.

The company plans to sell at least 7.5% of Adnoc Drilling, it said on Monday. An IPO could value the business at up to $10 billion, Bloomberg reported earlier this year, citing people familiar with the matter. In 2018, when Baker Hughes bought a 5% stake in Adnoc Drilling, that deal valued the company at about $11 billion, including $1 billion of debt.

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Given the valuation, a sale of that size could raise about $750 million and Adnoc said it may increase the amount of stock on offer. The sale will be the second IPO of one of the group’s subsidiaries after the sale of the retail fuel unit for $850.8 million in 2017.

Abu Dhabi, which holds most of the oil in the UAE, is using its energy assets to draw in global investors along with their funds and expertise as the nation puts cash into efforts to diversify the economy. While the UAE plans to keep selling oil for decades it’s trying to build out industries like technology, manufacturing and tourism to prepare for a world in which hydrocarbon demand is falling.

The UAE is the third biggest producer in the Organization of Petroleum Exporting Countries, behind Saudi Arabia and Iraq. Adnoc is pursuing a strategy of attracting investors and raising cash from minority stakes in its businesses.

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Regional energy powerhouses like the Saudis are also selling energy assets and trying to wean themselves off an overwhelming reliance on crude for government income. The kingdom recorded the world’s largest IPO when it sold shares in Saudi Aramco in 2019.

With governments and companies looking to go green and cut oil use, Saudi Arabia and the UAE see their huge reserves of low-cost crude and natural gas supporting chemicals and hydrogen production and establishing  them among the last suppliers of crude.

Adnoc Drilling IPO Offer Details:

Offer period to start on Sept. 13 and end on Sept. 23 for retail investorsWill represent 1.2 billion sharesThere will be three tranchesFirst for individuals and others investors: offering closes on Sept. 23Second for qualified institutional investors: offering closes on Sept. 26Third for Adnoc employees and UAE national retirees: offering closes on Sept. 23Announcement of final offer price: Sept. 27Expected date of listing: Oct. 3First Abu Dhabi Bank, Goldman Sachs, HSBC, JPMorgan are joint global coordinatorsEFG-Hermes, Emirates NBD Capital, International Securities, Merrill Lynch International and Societe Generale are joint bookrunners

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