Abu Dhabi National Oil Company (Adnoc) achieved a significant financial milestone by completing a $935 million placement of shares in its drilling unit, Adnoc Drilling, to institutional investors. The placement involved 880 million shares, equivalent to 5.5 percent of the total issued and outstanding share capital of Adnoc Drilling, enhancing the company’s free float to 16.5 percent.
The shares were sold at Dh3.90 each, reflecting a substantial 70 percent premium over the initial public offering (IPO) price of Dh2.30 per share and a modest 5.6 percent discount to the closing price on May 22, 2024. The settlement of the offering is scheduled for on or around May 28, 2024.
This strategic move attracted robust interest from institutional investors both within the Gulf Cooperation Council (GCC) and internationally, underscoring the strong market confidence in Adnoc Drilling’s robust financial performance and growth prospects. The recent first quarter financial results of Adnoc Drilling, published on May 13, 2024, demonstrated significant revenue and earnings growth, an increased dividend distribution, and notable progress in unconventional drilling.
Despite the placement, Adnoc will retain a majority stake of 78.5 percent in Adnoc Drilling and has committed to a six-month lock-up period where no further shares will be sold, subject to standard exceptions. This decision highlights Adnoc’s long-term commitment to its drilling subsidiary and its central role in Adnoc’s broader strategic growth initiatives.
Khaled Al Zaabi, Adnoc’s Group Chief Financial Officer, expressed satisfaction with the placement, noting, “The significant interest our offering generated from both domestic and international investors is testament to Adnoc Drilling’s growth trajectory since its IPO and its exciting future growth potential.”
Furthermore, the increase in free float is strategically positioned to potentially qualify Adnoc Drilling for inclusion in the Morgan Stanley Capital International (MSCI) Emerging Market Index at the next quarterly review, should it meet all relevant criteria. Such inclusion would likely broaden Adnoc Drilling’s investor base and enhance global recognition of its value proposition.
The offering was coordinated by notable financial institutions, including EFG Hermes UAE Limited, First Abu Dhabi Bank PJSC, Goldman Sachs International, and J.P. Morgan Securities PLC, serving as joint global coordinators and joint bookrunners, highlighting the high level of professional endorsement and support for Adnoc’s financial strategies.
