Adnoc shares soar on debut
Fuel retailer, which was oversubscribed 22 times, rose by 16% in the first minute of trading
Shares in Adnoc Distribution got off to a flying start on their first day of trading yesterday, in the capital’s first initial public offering in six years.
Shares in the retail arm of Abu Dhabi National Oil Company surged 16 per cent in the first minute of trading, before paring gains through the day to close up 6 per cent at Dh2.65.
“Transactions such as this IPO will allow Adnoc to better manage our capital and portfolio of assets, and expand our range of new and existing partnerships,” said Adnoc Group chief executive Dr Sultan Al Jaber.
“The IPO also supports the reinvigoration of the ADX, and will be a catalyst for further growth and development of the UAE capital markets.”
The IPO – the first share offering in an Adnoc subsidiary – raised Dh3.1 billion, valuing the company at about Dh31.3bn. The initial retail portion of the share offering was oversubscribed by 22 times, prompting the company to increase the allocation.
Adnoc Distribution runs 360 service stations and 235 Oasis convenience shops in the UAE, but not Dubai. It plans to open its first petrol stations in Dubai and Saudi Arabia next year.
Shares of fuel retailer Adnoc Distribution surged on their first day of trading on the Abu Dhabi Securities Exchange (ADX), as retail investors piled into the emirate’s first stock listing in over six years.
Shares in the retail arm of the Abu Dhabi National Oil Company (Adnoc) – priced last week at Dh2.5 – rose by 16 per cent in the first minute of trading yesterday, before paring gains throughout the day to close up 6 per cent at Dh2.65.
“There was no major sell-offs on the first day indicating that those that subscribed to the IPO see it as a long-term investment,” said Khaldoun Jaradat, trading manager at Ansari Financial Services.
“There’ll likely be a bit of more buy for the investors who weren’t able to participate in the IPO on Thursday, before things settle down next week.”
Adnoc Distribution’s IPO – the first share offering in an Adnoc subsidiary – raised Dh3.1 billion, valuing the company at around Dh31.3bn. The retail portion of the offering was oversubscribed by 22 times on the back of strong local interest.
“Transactions such as this IPO will allow Adnoc to better manage our capital and portfolio of assets, and expand our range of new and existing partnerships – from the upstream to the downstream,” said Adnoc Group chief executive Dr Sultan Al Jaber.
“The IPO also supports the reinvigoration of the ADX, and will be a catalyst for further growth and development of the UAE capital markets.”
Arqaam Capital issued a “buy” rating for the stock, predicting it would trade at Dh2.95 per cent – 11 per cent higher than yesterday’s close – within a year, according to Bloomberg.
Over 45 million Adnoc Distribution shares changed hands on the first day of trading, accounting for over half of total trading volume on the bourse.
“Turnover in the stock was fairly low, but it’s still encouraging that it performed the way it did against a fairly negative market backdrop in the UAE, particularly with regard to Emaar Development’s debut last month,” said Julian Bruce, head of institutional trading at the Egyptian investment bank EFG Hermes in Dubai.
Stock markets in the Arabian Gulf have underperformed their emerging market peers in 2017, amid lower oil prices and geopolitical uncertainties in the region.
Indexes in Dubai and Abu Dhabi are 2.2 per cent and 3.6 per cent lower for the year respecitvely, while MSCI’s Emerging Market Index has gained 29 per cent. Kuwait’s stock exchange is the region’s best performer so far this year , rising 8.5 per cent.
Emaar Development, the first IPO in Dubai since 2014, saw its shares drop 4.3 per cent on its first day of trading last month. The stock closed down 2.2 per cent at Dh5.38 yesterday, 10.8 per cent lower than its original listing price.
Adnoc Distribution is the first new stock to be listed on Abu Dhabi’s main exchange since the debut of National Takaful or Watania shares in November 2011.
Nasdaq Dubai today launched a futures contract for Adnoc Distribution, together with one for Emaar Malls.
The listing of its distribution arm is part of a broader strategy by Adnoc to more proactively manage its assets and unlock greater value from across the entire business. Adnoc Distribution currently operates 360 service stations and 235 Oasis convenience stores across the UAE except for Dubai.
It plans to open its first petrol stations in Dubai and Saudi Arabia next year, the latter under a franchise model with an as yet unnamed local partner.
No major sell-offs on the first day indicate that those that subscribed to the IPO see it as a long-term investment KHALDOUN JARADAT Trading manager at Ansari Financial