Dubai: Abu Dhabi is preparing for a round of mega-IPOS - the ADNOC Drilling Company will list its shares on the ADX by offering 7.5 per cent of its issued share capital. Apart from investors in the UAE and outside, ADNOC Group companies' employees and ADNOC Group's UAE National retirees can participate. The shares could start trading next month.
The Abu Dhabi entity is the largest national drilling company in the Middle East by rig fleet size. The parent company, ADNOC retains the right to increase the size of the offering at any time before pricing of the Offering.
ADNOC Drilling operates 107 rigs, of which 96 rigs are owned and 11 rigs are rented. It is the sole provider of drilling rig hire services and certain associated rig-related services to the ADNOC Group. In 2020, ADNOC Drilling had revenues of $2.09 billion and profit of $569 million. For the six months ended June 30, 2021, revenues were $1.12 billion.
- The IPO is being conducted, among other reasons, to allow ADNOC to sell part of its shareholding to more actively manage and optimize its portfolio of assets and create new investment opportunities across its business. Plus, this will allow it to increase trading liquidity for the shares and raise its profile with the international investors.
- ADNOC will continue to own a majority of ADNOC Drilling’s share capital post-IPO. Baker Hughes Holding SPV Ltd. which holds 5%, will not be offering any shares for sale in the IPO.
“I am delighted to announce our intention to float a minority stake in ADNOC Drilling," said Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC's Managing Director and Group CEO. "This highly compelling offering - in a company with a robust growth trajectory and attractive dividend policy - is open to all citizens and residents of the UAE in addition to international and local institutional investors.
"Building on the highly successful listing of ADNOC Distribution in 2017, this offering marks another significant milestone in ADNOC’s ongoing journey in unlocking and maximizing value across our integrated asset base.”
Position of strength
ADNOC Drilling's IPO should garner quite a bit of overseas interest. Announcing the IPO plans, the company lists its strengths as:
• Well-positioned to benefit from significant demand growth driven by ADNOC’s strategic upstream targets.
• Plan to expand rig fleet over five to 10 years with a planned net addition of 23 rigs by 2030.
• Achieved a 36 per cent cumulative drilling performance improvement from 2018-20 and completed 86 out of 108 integrated drilling services wells ahead of schedule and below the expected budget for 2019 and 2020.
• Fully-integrated services offering positions ADNOC Drilling to gain market share in the oilfield services space.
• Integrated drilling solutions market share has grown from 10 per cent in 2019 to 35 per cent in 2020 and expected to increase up to 45 per cent by the end of 2021.
• Well-placed to pursue additional opportunities for further growth in the UAE and regionally.
"This IPO will constitute a further step in ADNOC’s continued growth trajectory," the energy giant said in a statement. "ADNOC is fully supportive of ADNOC Drilling’s management and business strategy and intends to remain ADNOC Drilling’s long-term majority shareholder."