Adnoc’s $1.6 Billion Stock, Bond Sale Triggers Drop in Fuel Unit
Abu Dhabi’s state oil firm raised $1.64 billion by selling bonds and shares in its fuel arm, which slumped the most in more than a year.
The capital of the United Arab Emirates contains almost all the OPEC member’s hydrocarbon reserves. The government, along with others in the region such as Saudi Arabia and Oman, is seeking to use money from energy assets to build new industries and diversify the economy.
Abu Dhabi National Oil Co. sold 375 million shares in Adnoc Distribution PJSC at 4.36 dirhams ($1.19) each on Wednesday, a discount of roughly 10% to that day’s close. The stock fell 8.3% on Thursday to 4.45 dirhams, with trading volumes about 23 times higher than the average over the past month.
The shares are still up 19% so far this year and will be included in MSCI Inc.’s index of major emerging-market equities on Thursday.
On Wednesday, Adnoc also issued $1.195 billion of senior bonds that mature in 2024 and are exchangeable into the distributor’s stock.
The two deals saw “significant demand” from regional and international investors, Adnoc said. They came a day after Abu Dhabi’s government raised $2 billion through seven-year bonds, attracting almost $7 billion in demand.
Adnoc sold 10% of the retail subsidiary in 2017 via an initial public offering on the local bourse. It listed another 10% last September. The latest move will increase the free float to 30% if the bonds, which yield 0.7%, are converted into equity.
Adnoc Distribution, valued at $15.1 billion, is expanding internationally, increasing its gasoline stations in Saudi Arabia and looking to other markets such as Egypt and India.
The shares and bonds were placed at a blended stock price of 4.82 dirhams, which compares with Wednesday’s close of 4.85 dirhams. The debt will convert at 5.01 dirhams.
Citigroup Inc. and First Abu Dhabi Bank PJSC managed the share offering. They and Abu Dhabi Commercial Bank PJSC led the bond sale.
Since 2016, Adnoc has restructured its business by opening up some operating units and infrastructure to investors. In the past year, the likes of Brookfield Asset Management Inc. and Apollo Global Management Inc. have invested about $15 billion in the company’s gas pipelines and real estate.
Adnoc is also considering IPOs of its drilling business and a fertilizer joint venture called Fertiglobe
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