Adnoc to offer up to 20% of distribution arm

Adnoc CEO Sultan Ahmed Al-Jaber speaks during the Abu Dhabi International Petroleum Exhibition and Conference last week. (AFP)
Updated 21 November 2017
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Adnoc to offer up to 20% of distribution arm

LONDON: Abu Dhabi National Oil Company (Adnoc) is set to offer as much as 20 percent of its fuel distribution unit to investors. Its distribution arm manages petrol stations and convenience shops across the UAE.
The national oil company is offering a minimum stake of 1.25 billion shares, or 10 percent, up to a maximum of 2.5 billion shares, according to a Nov. 20 filing to the Abu Dhabi Exchange (ADX). The offer price range is due to be announced on Nov. 26.
If the initial public offering (IPO) is well-received by investors, it could be the first of a number of listings in the region, according to analysts.
Adnoc also plans to raise a $2.25 billion loan for its distribution unit prior to selling the stake, Reuters reported, citing sources familiar with the matter.
The $2.25 billion loan, which includes a $1.5 billion term loan and a $750 million revolving credit facility, is aimed at “establishing a well-structured balance sheet for the company” ahead of its IPO, Reuters reported.
“A successful Adnoc IPO should encourage other government entities, especially national oil companies in the Gulf, to list and become more transparent and raise cash for expansion,” Nitin Garg, manager, research, at Bahrain-based investment bank SICO, told Arab News. “The appeal and appetite for this IPO will depend on the valuation, which could be at a premium as the business has more of retail nature rather than being cyclical or industrial,” he added.
The drop in oil prices in recent years has pushed many Gulf governments to consider listing parts of its state-owned companies to bolster their finances.
Abu Dhabi-based Emirates Global Aluminium is expected to list next year while Saudi Aramco is reported to be on track to offer 5 percent of the company in late 2018, in a listing that could raise as much as $100 billion.
Aramco has yet to confirm the location of the listing, with international financial centers such as London and New York vying for the opportunity.
Plans to list at least 10 percent of Adnoc’s distribution arm were announced on Nov.13 during the ADIPEC oil and gas event, during the opening address by Sultan Ahmed Al-Jaber, UAE Minister of State and ADNOC Group CEO.
“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,” he said.
“But to be clear, ADNOC at a holding company level, will always remain wholly owned by the Abu Dhabi government, ” he added.
The listing would also support the company’s growth plans and the government’s 2030 economic vision, said Al-Jaber. The oil company is aiming to increase its upstream production capacity to 3.5 million barrels per day as well as upping its crude refining capacity by 60 percent and more than tripling its petrochemical ­production.
Joint global coordinators on the listing are Citigroup, First Abu Dhabi Bank, HSBC Bank Middle East and Merrill Lynch International. Joint bookrunners are EFG Hermes, Goldman Sachs International and Morgan Stanley.


German industry groups warn US on tariffs before Trump-Juncker meeting

Updated 22 July 2018
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German industry groups warn US on tariffs before Trump-Juncker meeting

  • Washington imposed tariffs on steel and aluminum imports from the EU, Canada and Mexico on June 1
  • Trump is threatening to extend them to EU cars and car parts

BERLIN: German industry groups warned on Sunday, before European Commission President Jean-Claude Juncker meets US President Donald Trump this week, that tariffs the United States has imposed or is threatening to introduce risk harming America itself.
Citing national security grounds, Washington imposed tariffs on steel and aluminum imports from the EU, Canada and Mexico on June 1 and Trump is threatening to extend them to EU cars and car parts. Juncker will discuss trade with Trump at a meeting on Wednesday.
“The tariffs under the guise of national security should be abolished,” Dieter Kempf, head of Germany’s BDI industry association said. Juncker should tell Trump that the United States would harm itself with tariffs on cars and car parts, he told Welt am Sonntag newspaper.
The German auto industry employed more than 118,000 people in the United States and 60 percent of what they produced was exported. “Europe should not let itself be blackmailed and should put in a confident appearance in the United States,” he added.
German Economy Minister Peter Altmaier told Deutschlandfunk radio on Sunday he hoped it was still possible to find a solution that was attractive to both sides. “For us, that means we stand by open markets and low tariffs,” he said
He said the possibility of US tariffs on EU cars was very serious and stressed that reductions in international tariffs in the last 40 years and the opening of markets had resulted in major benefits for citizens.
EU officials have tried to lower expectations about what Juncker can achieve, and played down suggestions that he will arrive in Washington with a novel plan to restore good relations.
Altmaier said it was difficult to estimate the impact of any US car tariffs on the German economy, but added: “Tariffs on aluminum and steel had a volume of just over six billion euros. In this case we would be talking about almost ten times that.”
He said he hoped job losses could be avoided but noted that trade between Europe and the United States made up around one third of total global trade.
“You can imagine that if we go down with a cold in the German-American or European-American relationship, many others around us will get pneumonia so it’s highly risky and that’s why we need to end this conflict as quickly as possible.”
Eric Schweitzer, president of the DIHK Chambers of Commerce, told Welt am Sonntag the German economy had for decades counted on open markets and a reliable global trading system but added: “Every day German companies feel the transatlantic rift getting wider.”