ADNOC Gas shares surge 25% in $2.5b IPO

DUBAI (AFP): Shares in the United Arab Emirates’ ADNOC Gas soared 25 percent in opening trade on Monday in a $2.5 billion initial public offering that aims to tap into growing demand for the fuel.

ADNOC Gas, a subsidiary of state-owned energy giant Abu Dhabi National Oil Company (ADNOC), rose to 2.96 dirhams ($0.80) from its launch price of 2.37 dirhams.

ADNOC Gas, which only became operational at the start of this year, is the biggest flotation yet on the Abu Dhabi stock exchange.

The IPO was heavily oversubscribed even after it was expanded from 4.0 to 5.0 percent of issued share capital in response to strong interest.

The final offer price of 2.37 dirhams, near the top of its range, implied a market capitalisation of around $50 billion.

At more than 50 times oversubscribed, it was the biggest demand ever seen for an initial public offering in the Middle East and North Africa, outstripping oil firm Saudi Aramco’s world-record $29.4 billion listing just over three years ago.

The rapidly organised IPO follows last year’s scramble for alternative gas resources after the Russia-Ukraine conflict and comes as countries search for cleaner fuels to mitigate global warming.

ADNOC, the United Arab Emirates’ key revenue earner, retains a 90 percent stake in the subsidiary formed from its former gas processing, LNG and industrial gas units.
Gas is being touted as cleaner than other fossil fuels as countries around the world strive to reduce their emissions.

Energy consultant Roudi Baroudi, who heads the Qatar-based Energy and

Environment Holding firm, said Liquified Natural Gas (LNG) was “the most important transition fuel in the move away from hydrocarbons”.

In 2021, the UAE produced 57 billion cubic metres (bcm) of natural gas, or about 1.4 percent of global output, according to the BP Statistical Review of World Energy.
That same year, the Emirates exported 8.8 bcm of LNG, 1.7 percent of world LNG exports, the Statistical Review said.

“As global efforts to battle climate change gain pace, the role of natural gas in general… is widely expected to grow,” Baroudi said.

“ADNOC enjoys a solid reputation, so it was to be expected that the ADNOC Gas IPO would attract strong interest.”

ADNOC Gas could be the first in a series of share offerings in Abu Dhabi this year.
At least eight companies are expected to follow in fields ranging from technology to asset management and regenerative medicine, Bloomberg said, citing Sameh Al Qubaisi, director general of economic affairs at Abu Dhabi’s Department of Economic Development.