ADNOC completes $1 billion institutional placement for distribution business

ADNOC had been considering selling a bigger stake in its fuel distribution business. (Reuters)
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Updated 14 September 2020

ADNOC completes $1 billion institutional placement for distribution business

  • The placement will increase ADNOC Distribution’s free float to 20 percent
  • ADNOC had been considering selling a bigger stake in its fuel distribution business

DUBAI: State-run Abu Dhabi National Oil Company (ADNOC) said on Monday it had completed a placement to institutional investors of 10 percent in its subsidiary ADNOC Distribution’s total share capital, or 1.25 billion shares, valued at $1 billion.
The placement will increase ADNOC Distribution’s free float to 20 percent, and contribute to improved liquidity of the company, ADNOC said in a statement. ADNOC will retain an 80 percent strategic stake in ADNOC Distribution and continues to see strong growth potential in the company, it added.
The transaction represents “the largest block placement of a publicly listed” company in the Gulf region and “leverages significant investor demand for ADNOC Distribution shares,” ADNOC said.
In 2017, ADNOC listed 10 percent of ADNOC Distribution, the largest operator of petrol stations and convenience stores in the United Arab Emirates, on the Abu Dhabi Securities Exchange.
ADNOC had been considering selling a bigger stake in its fuel distribution business, including a secondary listing overseas, after the initial public offering (IPO) in 2017, Reuters had reported.
On Monday, ADNOC said the placement was priced at 2.95 dirham per share, which is 18 percent above the IPO price of 2.50 dirham and represents a 5 percent discount to the company’s 3-month volume weighted average price.
“This transaction highlights the attractive nature of ADNOC Distribution to investors, and ... demonstrates the high-quality investment opportunities offered by ADNOC,” Sultan Al-Jaber, the chief executive officer of ADNOC, said in the statement.
“For the investors, it presented a unique opportunity to access a sizeable stake in ADNOC Distribution ... with an attractive and resilient dividend policy.”
Last month, ADNOC Distribution said its 2020 dividend policy would continue with an increase of 7.5 percent to 2.57 billion dirhams.
Four years ago, ADNOC started a transformation strategy to adapt more quickly to market changes, and the company has said it will continue to work with investors to attract foreign capital and maximize value from its resources.


Saudi Arabia to host ‘virtual’ G20 meeting on oil markets

Updated 27 September 2020

Saudi Arabia to host ‘virtual’ G20 meeting on oil markets

  • Energy ministers will also discuss plans for ‘green’ economic recovery from ravages of coronavirus pandemic

DUBAI: Energy ministers from the G20 countries under the presidency of Saudi Arabia will meet virtually on Sunday to discuss volatile oil markets and plans for a “green” recovery from the economic shock of the COVID-19 pandemic.

The Kingdom is strongly backing a “circular carbon economy” strategy to remove harmful greenhouse gas emissions from the atmosphere.

The two-day event is the second time this year that energy policymakers have come together, following the historic meeting last April that helped stabilize crude markets in meltdown.

Markets have since recovered and the price of benchmark Brent crude has more than doubled, but doubts about their resilience have resurfaced amid fears of a “second wave” of economic lockdowns.

Prince Abdul Aziz bin Salman, the Saudi energy minister and chairman of the G20 event, has highlighted the need for tight discipline by members of the OPEC+ oil producers’ alliance to combat market “uncertainty.” 

“If we are serious about mitigating the impact of the shock and navigating through these extraordinary times, this is our only path,” he said.

The G20 said ministers would discuss ways to “strengthen collaboration toward market stability and security and discuss promoting and advancing sustainable energy systems through the Circular Carbon Economy platform,” and address “advancing universal access to energy and clean cooking for all.”

There is consensus on the need to mitigate harmful emissions, but some European countries and nongovernmental organizations are believed to be pressing for a stronger stance on fossil fuels.

The Saudi strategy, supported by the US and Russia, is for a more inclusive stance on hydrocarbon resources, while simultaneously promoting renewable sources such as solar and wind.