ADNOC Gas has announced that its IPO will include over 3B shares at a price range of AED 2.25 to AED 2.43 per share, implying a total equity value of between AED 172.7B to AED 186.5B ($47B to $50.8B). This will make it the biggest IPO of 2023 worldwide so far. The IPO size is expected to be between AED 6.9B to AED 7.5B.
The final offer price will be revealed on March 3, and the price range is in line with analysts’ expectations, offering a 6.5AED yield based on the stated dividend policy. ‘Cornerstone investors’ including ADQ and IHC have committed a total of $850M to the IPO. ADNOC Gas will be the fifth ADNOC subsidiary or JV to have a presence on ADX. The company had previously announced an annual base dividend of $3.25B.
ADNOC Gas has access to 10B standard cubic feet per day of gas processing capacity. The company meets 60% of the UAE’s sales gas needs. It has access to 95% of UAE’s natural gas reserves, estimated to be the 7th largest natural gas reserves globally.
Investors have an opportunity to participate in the growth of ADNOC Gas, a company that plays a vital role in the UAE’s energy development program, especially with recent gas discoveries. ADNOC Gas reported a net income of $3.6B in 2021, which increased to $4.2B in the year to October 2022, aided by the surge in gas prices last year. In the first 10 months of 2022, the company generated adjusted revenues of over $21B.
The subscription period for ADNOC Gas IPO is open until March 1 for UAE retail investors, and employees of ADNOC group firms residing in the UAE and UAE National retirees from the ADNOC group (and residing in the UAE) are also eligible to participate. The book-building process for qualified investors will continue until March 2, with allotment notifications for UAE retail investors to be sent on March 8. The completion of the offer and admission to ADX is expected on March 13.
According to Sameer Lakhani, Managing Director of Global Capital Partners, the company’s competitive valuation, superior earnings visibility, and high dividend yields make it an attractive investment for long-term investors.
Oman and Saudi Arabia have their own first-of-2023 IPOs running, in what promises to be a strong year for GCC entities thinking of going public. Saudi Tadawul could end up listing more than 20 of these this year. “Foreigners have remained net buyers of GCC equities for the last 23 consecutive months,” said Junaid Ansari, Senior VP of Investment Strategy and Research at Kamco Invest. “That said, net buying by foreigners during January 2023 was at a six-month low of $350.3M (excluding Bahrain), mainly led by a seasonal slowdown.”
Oman and Saudi Arabia are also currently conducting their first IPOs of the year, adding to the growing number of GCC entities looking to go public in 2023. The Saudi Tadawul exchange may have more than 20 IPOs this year. Despite a seasonal slowdown, foreigners have been net buyers of GCC equities for the past 23 months, according to Junaid Ansari, Senior VP of Investment Strategy and Research at Kamco Invest. He believes that GCC markets offer strong stocks, a stable investment environment, and significant potential, making them an attractive prospect for foreign investors looking to participate in IPOs in the region.
Several cornerstone investors, including Abu Dhabi Pension Fund, Alpha Wave Ventures II LP, IHC Capital Holding llc, OneIM Fund I LP, and entities ultimately controlled by ADQ and Emirates Investment Authority, have committed up to $850M in the ADNOC Gas IPO, subject to the final offer price and based on the current offer size. The cornerstone investors will be subject to a 12-month lock-up arrangement.