ADNOC ‘planning overseas listing for distribution offshoot’

The Abu Dhabi National Oil Company said it was ‘delivering on its objectives’ and making good progress in implementing growth plans. (Supplied)
Updated 06 April 2019
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ADNOC ‘planning overseas listing for distribution offshoot’

  • ADNOC reported to be considering listing ADNOC Distribution on New York’s Nasdaq exchange
  • The sale of more shares in ADNOC Distribution would be the latest sign that the Gulf’s giant oil companies are increasingly turning to international capital markets to fund expansion

DUBAI: Abu Dhabi National Oil Company (ADNOC) is considering a secondary listing for its subsidiary ADNOC Distribution overseas, three sources told Reuters.
In 2017, ADNOC listed 10 percent of ADNOC Distribution, the largest operator of petrol stations and convenience stores in the UAE, on the Abu Dhabi Securities Exchange.
Reuters reported last June that ADNOC was considering selling another 10 percent stake in its fuel distribution business.
ADNOC Distribution was seeking a minimum free float of 15 percent to improve its chances of joining the MSCI Emerging Markets Index and attract more international investors, a source said at the time.
One of the sources said ADNOC was considering listing ADNOC Distribution on New York’s Nasdaq exchange, while a second source added that a London listing had also been discussed.
Another source said that Abu Dhabi was also one of the options being discussed.
The company started discussing an international listing “a while ago,” said one of the sources, adding that there was no imminent plan to proceed with the transaction.
The sources declined to be named due to commercial sensitivities.
A spokesman for ADNOC said: “As evidenced from ADNOC Distribution’s solid financial results in 2018, the company continues to deliver on its business objectives and is making good progress in the implementation of its growth plans. This remains our focus at present. ADNOC does not comment on market speculation.”
The sale of more shares in ADNOC Distribution, should it materialize, would be the latest sign that the Gulf’s giant oil companies are increasingly turning to international capital markets to fund expansion.
Before oil prices crashed in 2014, state energy firms in the Gulf largely financed themselves with money from their governments. But low oil and gas prices has put government finances under pressure.
Saudi state oil giant Aramco is currently meeting global investors ahead of an inaugural international bond, after postponing its planned initial public offering last year until 2021.
For ADNOC Distribution, an obstacle to listing now is that its shares have mostly been trading below their IPO price, making it unattractive for the company to sell and for foreigners to buy if they think they can purchase the stock cheaper on the public market at a later date.
On Thursday the shares traded at the IPO price of 2.5 dirhams before the company announced that shareholders approved a dividend increase.
Before the initial listing in 2017, ADNOC said it might sell as much as 20 percent in the fuel distribution unit.


Saudi Arabia relaxes ownership limits for foreign investors

Updated 26 June 2019
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Saudi Arabia relaxes ownership limits for foreign investors

  • Capital Market Authority chairman, Mohammed El Kuwaiz said, ownership in the Saudi capital market by financial investors had increased threefold this year
  • The move aims to help enhance the market’s efficiency and attractiveness and to expand the institutional investments base

RIYADH,: Saudi Arabia has relaxed a 49% limit for foreign strategic investors in shares of listed companies, aiming to attract billions of dollars of foreign funds as the Kingdom opens up the region’s largest bourse to a more diverse investor base.
The country has introduced a raft of reforms in recent years to make its stock market, the region’s biggest, attractive to foreign investors and issuers.
The move aims to help enhance the market’s efficiency and attractiveness and to expand the institutional investments base, the regulator, the Capital Market Authority (CMA), said in a statement on its website.
The Saudi stock market, which opened to foreign investors in 2015, has seen an upsurge in foreign fund flows since the start of the year due to its inclusion in the emerging markets indexes.
“In the beginning of this year, we had only one percent ownership in the Saudi capital market by financial investors, today it is over three percent, that’s more than a threefold increase,” CMA chairman, Mohammed El-Kuwaiz told Reuters in an interview.
“Our hope is that we can see a similar increase in terms of pace and magnitude as we start to create more avenues for foreign investors to come in to the market,” he added.
There will be no minimum or maximum ownership limit, although the owners must hold the shares for two years before they can sell.
Kuwaiz said huge demand from non-financial foreign investors pushed the CMA to grant approval on an exceptional basis to a number of strategic foreign investors to increase their holdings in Saudi listed companies. These included transactions at an insurance firm and a local bank.
Foreign investors have been net buyers of Saudi equities over the past few months, with purchases worth 51.2 billion riyals ($13.6 billion) until May 30. They currently own 6.6% of Saudi equities, of which 3.15% is owned by strategic foreign investors.
Local shares were incorporated into the FTSE emerging-market index in March and the MSCI emerging market benchmark in May this year. The country’s Tadawul All-Share Index is up 11 percent year-to-date.
Strategic foreign investors can take stakes in listed companies by buying shares directly on the market, or through private transactions and via initial public offerings.
Asked how this move would reflect on the Aramco IPO, planned for 2021, Kuwaiz said it would assure that the market has the physical regulatory and investor infrastructure to accommodate a company as large and as extensive as Saudi Aramco.