Strong interest as UAE oil giant lists retail arm

ADNOC Distribution is the sole retail fuel operator in Abu Dhabi and Sharjah. (Reuters)
Updated 14 December 2017
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Strong interest as UAE oil giant lists retail arm

ABU DHABI: Investor interest was strong Wednesday as Abu Dhabi’s state energy company listed a stake in its retail distribution arm, the first time the emirate has sold shares in one of its oil firms.
The Abu Dhabi National Oil Company said it had raised $845 million by floating 10 percent of its subsidiary ADNOC Distribution, a landmark share offering as Gulf energy firms open up to outside investments.
The initial public offering price for the shares was at 2.5 dirhams (68 US cents) and by 9:15 a.m. GMT they were trading at 73 cents.
ADNOC said the IPO brought the subsidiary’s market capitalization to $8.5 billion, making it the fourth-largest firm on the Abu Dhabi Securities Exchange.
The statement said the IPO was oversubscribed several times and that 90 percent of the shares were sold to institutional investors, a third of them international, and the rest to individual investors.
Abu Dhabi, the UAE capital which holds more than 90 percent of the country’s 98 billion barrels of crude reserves, has never before offered public shares in one of its oil companies.
Hit hard by the sharp drop in oil prices, energy-dependent Gulf states have resorted to a string of reforms including hiking fuel and power prices, imposing taxes and selling off part of their strategic assets to raise funds.
Neighboring oil kingpin Saudi Arabia is planning to eventually float up to 5 percent of its national oil company Aramco, in what many expect would be the biggest IPO in history.
With 360 fuel stations and more than 235 stores, ADNOC Distribution is the UAE’s largest operator of petrol stations and the sole retail fuel operator in the emirates of Abu Dhabi and Sharjah.
“We were extremely pleased with the demand for this landmark IPO. We received substantial interest from the international investment community, as well as an overwhelming response from investors in the UAE,” ADNOC CEO Sultan Al-Jaber said in the statement.
Established in 1973, ADNOC Distribution posted net profits of $485 million in 2016.
ADNOC has recently renewed concession rights and offered new joint ventures to a number of international oil companies as it bids to raise UAE output to 3.5 million barrels per day next year, from the current 3.2 million bpd.
 


SABIC prepares to meet investors to offer bond

Updated 25 September 2018
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SABIC prepares to meet investors to offer bond

  • The Kingdom’s petrochemical giant will be meeting investors in London, New York, Los Angeles and Boston from Sept. 25
  • SABIC has also confirmed the appointment of BNP Paribas and Citigroup as global coordinators on the sale

LONDON: Saudi Basic Industries Corp. (SABIC) is preparing to offer its dollar-denominated unsecured bond to the global market with investor meetings due to start this week.
The Kingdom’s petrochemical giant will be meeting investors in London, New York, Los Angeles and Boston from Sept. 25, according to a filing on the Saudi stock exchange on Tuesday.
The Saudi company is likely to be keen to tap into the heightened international interest in the Kingdom’s financial markets following the lifting of some restrictions on foreign investors’ activities at the start of the year.
SABIC has also confirmed the appointment of BNP Paribas and Citigroup as global coordinators on the sale, alongside HSBC Bank, Mitsubishi UFG Securities EMEA and Standard Chartered Bank acting as joint lead managers, in its Tadawul note.
The proposed issuance has been well-received so far by analysts with ratings agency Moody’s Investor Service assigning an ‘A1’ rating to the proposed senior unsecured notes to be issued by the financial vehicle, referred to as SABIC Capital II, and guaranteed by SABIC itself.
“SABIC’s A1 rating reflects its strong business position in the chemical sector and its ability to weather industry volatility, particularly given its healthy operational cash flows and conservative liquidity profile,” said Rehan Akbar, a senior analyst at Moody’s, in a note on Monday.

 

The bond is anticipated to be used in part to refinance an existing SR11.3 billion ($3 billion) one-year bridge loan raised in January this year to fund the company’s 24.99 percent stake in the Swiss chemical company Clariant, according to the Moody’s note. All regulatory requirements were completed on this acquisition earlier this month.
Cash proceeds from the bond may also be used to repay a $1 billion bond due on Oct. 3, according to Moody’s.
On Tuesday SABIC confirmed that the bond will be used mainly to refinance “outstanding financial obligations” of the company and its subsidiaries.
Analysts at rating agency S&P Global were also upbeat about SABIC’s outlook, with research published on Monday stating that the company has “strong profitability” via its KSA operations and a “strong” liquidity position.
“The debt issuance is helpful for the credit profile in the sense that it extends the company’s debt maturity profile and strengthens its liquidity position,” said Tommy Trask, corporate and infrastructure credit analyst at S&P Global.
The agency currently assigns the petrochemical firm an ‘A Minus’ rating, with a “stable outlook,” which it said reflects its “view on the sovereign as well as its expectations that SABIC will maintain high profitability under current benign industry conditions.”
S&P Global’s report said margins in the global chemical industry will “largely stabilize in 2018 following several years of improvement, attributable to the increase in commodity chemical capacity.”
However, it also warned that a key risk to credit quality is
the trend for mergers and acquisitions within the sector and the “potential negative impact on credit metrics from funding them with debt.”

FACTOID

SABIC operates in more than 50 countries across the world.