ADNOC share offering to value fuel retail business at $8.5bn

ADNOC will realize $850 million from the IPO of its fuel retail unit. (Reuters)
Updated 09 December 2017

ADNOC share offering to value fuel retail business at $8.5bn

DUBAI: ADNOC Distribution, the retail and fuel-selling arm of Abu Dhabi’s state-owned oil company, will be valued at $8.5 billion — around the middle of a range of possible valuations — when trading opens on the Abu Dhabi Securities Exchange (ADX) next week.
The sale of 10 percent of the unit in an initial public offering (IPO) was oversubscribed “multiple” times by institutional investors, and 22 times to retail investors, who had their allocation doubled to 10 percent of the new shares on offer when the level of interest became apparent.
The IPO will be the first in the UAE capital’s stock market since 2011 and the biggest for a decade. It is also the first time a “book building” exercise — in which the issuer sets the price after testing investor demand across a range of valuations — has been used on the ADX.
The shares will be valued at 2.5 dirhams each, in the middle of a range running from 2.35 to 2.65 dirhams. Earlier expectations of a top level value of 2.95 dirhams and the sale of up to 20 percent of the unit were scaled back, but further share sales have not been ruled out by advisers.
Although the company did not specify the level of institutional oversubscription, people familiar with it said it was around three times the number of shares on offer across the total price range.
Some 60 percent of the new shares went to regional investing institutions, with 30 percent to global investors. It is believed most of the global tranche went to UK and US investors, with big domestic UAE interest from the regional element and some interest from Saudi investors.
Sultan Ahmed Al-Jaber, group chief executive officer of ADNOC, which will realize $850 million from the IPO, said: “This important and strategic offering represents a unique opportunity for investors to own a stake in the UAE’s number one fuel retail brand, and the largest network of retail convenience stores.
“The strong business model, unique market position and attractive growth prospects have garnered healthy and solid demand for the IPO, which has set a new benchmark for the UAE equity capital markets.
“ADNOC Distribution will continue to receive the full support and commitment of the group as it begins the next phase of its growth and transformation, as one of the UAE’s leading listed companies.”
ADNOC will use some of the proceeds from the listing to grow its petrol stations business outside Abu Dhabi, with sites already believed to be identified in neighboring Dubai. Its petrol forecourt shops form the largest retail chain in the country by number of shops.
It is also thought to be close to deals to expand in the Saudi Arabian petrol retail business, with partners believed to be already lined up for franchise deals in the Kingdom.
A successful IPO could encourage other big UAE companies to go for stock-market listings. Emirates Global Aluminium and the conglomerate Senaat are among those also believed to be considering listings.


SoftBank to create $30bn tech giant through merger

Updated 5 min 58 sec ago

SoftBank to create $30bn tech giant through merger

  • Deal signals SoftBank move into services outside its core wireless business

TOKYO: SoftBank Corp. plans to merge Internet subsidiary Yahoo Japan with messaging app operator Line Corp. to create a $30 billion tech group, as it strives to compete more effectively with local rival Rakuten and US tech powerhouses.

The deal, which would combine the providers of two of Japan’s top QR code payment services, offers Yahoo Japan access to 164 million Line users and their data in Japan and Southeast Asia as SoftBank expands into services outside its core wireless business.

It also gives loss-making Line a deep-pocketed patron who can offer its tech expertise, including potentially via the Vision Fund.

The deal comes as SoftBank Group founder Masayoshi Son battles to restore his reputation after an ill-fated investment in office-sharing firm WeWork.

SoftBank Corp. said Yahoo Japan, which last month changed its name to Z Holdings Corp, would aim to complete its merger with Line, owned by South Korea’s Naver Corp. , in October 2020.

HIGHLIGHTS

● SoftBank, Naver to form 50:50 joint venture.

● Joint venture will control Yahoo Japan, Line.

● Plan tender offer for Line shares.

The companies plan to reach a definitive agreement by next month under which SoftBank Corp. and Naver will form a 50:50 venture that would control Z Holdings, which in turn would operate Yahoo Japan and Line.

SoftBank Corp. and Naver, which owns 73 percent of Line, plan to launch a tender offer for Line’s remaining shares at 5,200 yen each — a 13.4 percent premium to the price before news of the merger broke. That values Line at about $12 billion.

Line has been looking for growth through expansion into areas such as QR code payments with Line Pay, but has been squeezed because of its limited funds and heavy-spending peers including SoftBank, which has a rival service called PayPay.

The merger of Japan’s most popular messaging app with one of its top online retailers is the latest consolidation in its tech industry, and comes as Rakuten is expanding into SoftBank’s core business with the launch of mobile services.

Yahoo Japan this month completed its acquisition of online fashion retailer Zozo Inc, whose founder Yusaku Maezawa sold down his stake following missteps.