This logistics and shipping unit will be ADNOC's sixth entity to list on ADX. This year, there was the one from ADNOC Gas. Image Credit: Shutterstock

Dubai: Retail investors can start subscribing to the ADNOC Logistics & Services IPO from May 16, running up to May 23. The ADNOC unit is to list on ADX on June 1, and will be the second from the Abu Dhabi energy giant this year after ADNOC Gas.

Institutional investors can also start putting up their funds for subscription from May 16 and continue to do until May 24.

On the dividend side, ADNOC L&S plans paying $195 million for the second quarter and the second-half of 2023.  This is equivalent to annualized dividends of $260 million for 2023.

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How the payments will be split

In the payout, $65 million is for Q2-23 and should be paid in the fourth quarter of 2023. The $130 million left is for H2-23 and to be paid in the second quarter of 2024.

“As the sixth company ADNOC is bringing to market, ADNOC L&S is ideally placed to drive performance, deliver value, and capitalize on both ADNOC’s ambitious growth roadmap and the growing global demand for lower-carbon, reliable energy supplies,” said Khaled Al Zaabi, Group Chief Financial Officer, ADNOC.

ADNOC L&S intends to pay dividends twice a year, with the initial payment on the first-half results set for the fourth quarter of the year. Another payment will follow after the second-half results, to be paid in the second quarter of the following calendar year.

The company expects to increase the 2023 annual dividend per share on a 'progressive basis by at least 5 per cent annual growth over the medium term'. And regularly review the policy when 'value-accretive growth opportunities' come calling.

ADNOC is selling 15 per cent in the entity, and with the IPO price to be confirmed after a book-building run.

What ADNOC is aiming for from L&S IPO
"The offering is being conducted, among other reasons, to allow the selling shareholder to sell part of its shareholding to more actively manage and optimize its portfolio of assets, while providing increased trading liquidity in the shares of the Company and raising the Company’s profile within the international investment community..."

New funding plans

ADNOC L&S is targeting a capex of $4 billion to $5 billion in the medium term. This is meant to:

  1. Expand the scope of services provided to the ADNOC Group companies.
  2. Invest in decarbonization solutions to help drive the UAE energy transition.
  3. Expand relationships with, and scope of services provided to, existing and new clients, including in the shipping business unit and through the expansion of ADNOC L&S’ integrated logistics services platform services.
  4. Continue growth of international operations.
  5. Develop new business verticals.

"Through our specialized business segments of integrated logistics, shipping, and marine services, we provide cost-competitive and sustainable solutions for the logistics and maritime energy sector," said Capt. Abdulkareem Al Masabi, CEO of ADNOC L&S.

“Our IPO offers an exciting opportunity to accelerate our growth, supporting ADNOC Group with its ambitious growth strategy, while further expanding the services provided to our customers and exploring new geographical areas and business verticals.

"With high cash flow visibility, a world class asset base, and an experienced management team supported by a highly dedicated workforce, ADNOC L&S is poised for significant growth, and set to continue delivering strong financial and operational performance."

Revenue mix

Based on revenues for 2022, over 65 per cent of ADNOC L&S’ revenue was derived from long-term agreements with terms of more than one year. ADNOC Group companies accounted for 72 per cent of ADNOC L&S’ total revenue in 2022.

ADNOC L&S’ revenue last year was $2.28 billion. The adjusted pro forma EBITDA was $599.3 million. "Assuming a full calendar year contribution from the ZMI Holdings acquisition in 2022, ADNOC L&S’ revenue would have increased at a compound annual growth rate (CAGR) of more than 20 per cent between 2017 and 2022," said a statement.