ADNOC plans stake sale in drilling unit

Abu Dhabi’s ADNOC has announced plans to divest approximately 5.5 per cent of its stake in its drilling unit, over two years following its successful initial public offering (IPO) which raised $1.1 billion, according to Reuters citing the company’s statement.

According to the company’s statement on Wednesday, additional shares in the unit would be made available to eligible institutional investors. As of Wednesday’s close, shares of ADNOC Drilling were valued at 4.13 dirhams ($1.12).

Based on this valuation, the 5.5 per cent stake up for grabs would amount to approximately $989.6 million. The process of book building for the offering of about 880 million shares will commence “immediately” and is slated to conclude on May 23, or earlier. Following this, the offer price and final number of shares sold will be determined, as per ADNOC’s statement.

Moreover, the company anticipates that increasing ADNOC Drilling’s free float will pave the way for the company’s inclusion in the Morgan Stanley Capital International (MSCI) Emerging Market Index. This inclusion could take place during the next quarterly index review, provided ADNOC Drilling meets the necessary criteria, the company added.

Currently, ADNOC owns 84 per cent of ADNOC Drilling, having previously divested an 11 per cent stake in October 2021. Additionally, Baker Hughes holds a further 5 per cent stake in the drilling unit.

The IPO had been priced at 2.3 dirhams per share, with the stock experiencing a 30 per cent surge upon its debut.

This new divestment aligns with ADNOC’s objective of bolstering the Abu Dhabi equity capital market while delivering sustainable value to shareholders within its listed portfolio, the state oil giant affirmed.

Joint global coordinators and bookrunners for the offering include Egyptian investment bank EFG Hermes, First Abu Dhabi Bank, Goldman Sachs, and JPMorgan Securities.