Adnoc set to raise $1.1bn as it increases size of drilling IPO to 11% amid strong demand

The company will continue to maintain its majority 84% stake in its drilling unit

Adnoc headquarters in the Corniche, Abu Dhabi. US energy services company Baker Hughes will retain its 5% interest in Adnoc Drilling. Khushnum Bhandari / The National

The Abu Dhabi National Oil Company increased the size of the initial public offering of its drilling subsidiary to 11 per cent from 7.5 per cent of its share capital, as the company registered strong investor demand and “significant oversubscription across all tranches”.

Adnoc Drilling will now offer 1.76 billion ordinary shares from 1.2 billion at a share offer price of Dh2.30, with it set to raise about $1.1 billion, Adnoc said in a statement on Wednesday.

The subscription period for the Adnoc Drilling IPO remains unchanged and will close tomorrow for UAE retail investors and on September 26 for qualified domestic and international institutional investors.

The company is expected to list on the Abu Dhabi Securities Exchange (ADX) on or around October 3 and the IPO is set to be the largest ever on the exchange.

“The enlarged offering will enable a broader investor base to obtain exposure to Adnoc Drilling’s highly attractive value proposition,” the company said.

Adnoc Drilling is one of the largest drilling companies in the Middle East, operating 107 onshore, offshore and island rigs, of which 11 are rented. The company, which began operations in 1972, has expanded its fleet of rigs, adding 67 since 2010, in line with the growth in oil and gas production capacity at Adnoc.

This is the second IPO for the Adnoc Group, which listed 10 per cent of the company's distribution business in 2017. Adnoc doubled the amount of its free-floating stock to 20 per cent in September last year, following a block placement of 1.25 billion shares, valued at $1bn, with institutional investors.

Adnoc will continue to maintain its majority 84 per cent stake in Adnoc Drilling, while US energy services company Baker Hughes will retain its 5 per cent interest.

Following the new offer, Adnoc will increase the size of tranches reserved for UAE retail investors, including company employees and national retirees.

The company will announce the final tranche sizes on September 21.

The ADX has outperformed regional markets, rising more than 50 per cent since the beginning of this year, which has pushed its market capitalisation to about Dh1.39 trillion ($378.6bn).

This is the second major listing this year in Abu Dhabi.

In July, Al Yah Satellite Communications (Yahsat), a unit of Mubadala Investment Company, raised about $730 million through a public offering.