Adnoc Drilling successfully floats further stake

Alamy via Reuters

• Adnoc Drilling lists 880m shares
• Professional investors only
• Q1 profit $275m

Abu Dhabi state oil company Adnoc has successfully placed a further 5.5 percent of listed subsidiary Adnoc Drilling, increasing the company’s free float to 16.5 percent.

The sale of an additional 880 million shares through a book-building process will boost trading of Adnoc Drilling’s stock on Abu Dhabi’s bourse.

Adnoc restricted the share sale to so-called professional investors, with strong demand from institutional investors in the GCC and internationally. Retail investors were not able to participate.

---

---

At AED3.90 per share, around 70 percent above the initial public offering (IPO) price of AED2.30 per share, the offering represented a 5.6 percent discount to the company’s closing price on Wednesday.

As part of the sale, Adnoc, which will retain a majority 78.5 percent shareholding in the company, committed not to sell any more of its stake in Adnoc Drilling for at least six months.

A higher free float is also expected to provide a pathway towards inclusion in the Morgan Stanley Capital International (MSCI) Emerging Market Index, which may take place at the next quarterly review, subject to regulatory approval, according to a statement on Thursday.

Several Gulf companies have launched initial public offerings this year, extending a flotation drive among government-owned and privately controlled businesses.

This trend runs counter to more subdued activity in other regions as higher-for-longer interest rates make borrowing more expensive for would-be IPO subscribers as well as boosting returns in other asset classes such as bonds and cash deposits.

• Adnoc Drilling first quarter profit rises 26%
• Adnoc buys 10% in LNG project in Mozambique
• Adnoc Logistics & Services first-quarter profit up 34%

Khaled Al Zaabi, group chief financial officer, Adnoc, said the interest was “testament to Adnoc Drilling’s growth trajectory since its IPO and its exciting future growth potential”.

Adnoc Drilling made a first-quarter net profit of $275 million, up from $219 million in the prior-year period.

The company completed a $1.1 billion IPO in September 2021 that was more than 30 times oversubscribed. This sold 11 percent of Adnoc Drilling at AED2.30 per share.

The stock fell 4 percent to AED4.13 on Wednesday, trimming its gains since listing to 80 percent.

Strategic partner Baker Hughes owns 5 percent of Adnoc Drilling and US oil and gas drilling company Helmerich & Payne holds 1 percent.