Adnoc and Borealis to list 10% of petchems maker Borouge on Abu Dhabi stock market

Latest IPO on ADX is of more than three billion shares in the company and will open to investors from May 23 with trading expected on June 3

Borouge's new production unit in Ruwais will boost the UAE’s polypropylene production to meet growing global demand. Photo: Adnoc

Borouge, a joint venture between Abu Dhabi National Oil Company and Austrian chemicals producer Borealis, announced early on Wednesday its intention to float a minority stake in the company on the Abu Dhabi Securities Exchange — the second-biggest Arab stock market.

The Abu Dhabi-based company intends to go public with the listing of 10 per cent of its shares, or more than three billion ordinary shares.

After the offering, still subject to regulatory approval, Adnoc will own 54 per cent of the company, while Borealis will own 36 per cent.

“Following the highly successful listings of Adnoc Distribution, Adnoc Drilling and Fertiglobe, Adnoc is bringing to the market a UAE-based, globally competitive market leader,” said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, and Adnoc managing director and group chief executive.

“This world-class business provides cutting-edge manufacturing, consumer and infrastructure solutions and offers innovative technologies. This latest offering will be open to all citizens and residents of the UAE in addition to qualified international and local institutional investors,” Dr Al Jaber said.

Following the offering, the company expects to pay fixed dividends of $325 million in September and $650m in March next year, both relating to the financial year 2022. For the fiscal 2023, it aims to pay a dividend of no less than $1.3 billion.

Its ability to pay dividends is dependent on a number of factors, such as the “availability of distributable reserves, the capital expenditure plans and market conditions”.

Established in 1998, Borouge is a petrochemical company that employs more than 3,100 people and serves customers in more than 50 countries across Asia, the Middle East and Africa.

It provides polyolefin solutions for the agricultural, infrastructure, energy, advanced packaging, mobility and healthcare industries.

Its portfolio of products includes polyethylene — the most common form of polymer in use — and polypropylene — the second most common form of polymer — which are used in a variety of products such as pipes, fittings, wires and cables and also have automotive, sustainable packaging, agricultural and medical applications.

Last month, Adnoc announced it would buy Mubadala Investment Company’s 25 per cent stake in Borealis. The deal will allow the state-owned oil and gas producer to expand its international footprint in the fast-growing chemicals and petrochemical sector.

“Through Borouge and our recently announced 25 per cent equity investment in Borealis, Adnoc is poised to capitalise on the significant industrial and consumer-led growth in the petrochemicals sector over the coming decades,” Dr Al Jaber said.

“Today’s proposed listing, our fourth company to come to market, is another significant milestone in our highly successful value creation and strategic growth journey.

“Adnoc continues to consistently unlock and maximise value across its integrated upstream and downstream asset base in order to drive sustainable growth for the benefit of Abu Dhabi and the UAE,” Dr Al Jaber said.

The emirate plans to triple its petrochemical production capacity, from the 4.5 million tonnes currently produced entirely by Borouge in Ruwais, by 2025.

Borouge’s first polythene unit was commissioned in 2001 and its capacity is 450,000 tonnes a year.

Borouge 2 and 3, commissioned in 2010 and 2014, raised the capacity to 2 million tonnes and 4.5 million tonnes of polythene and polypropylene a year, respectively.

Borouge 4, which was announced in February, will increase the company’s overall polyolefin production to 6.4 million tonnes, making it the world’s largest single-site polyolefin complex.

“Demand for our innovative polyolefin solutions is set to increase in the years ahead, driven by our differentiated products and technology, commitment to sustainable solutions and operations, and robust industry growth trends,” said Hazeem Al Suwaidi, chief executive of Borouge.

“Our success has been built on the dedication and expertise of our people and we look forward to welcoming new shareholders to be part of the growth of Borouge, as we seek to list our shares on the Abu Dhabi Securities Exchange,” he said.

The offer period for UAE retail investors will start on May 23 until May 28. Meanwhile, the offer period for institutional investors will start on May 23 and is expected to close May 30, Borouge said.

A minority listing on the ADX demonstrated the value Borouge represented for the markets and customers it served, Borealis chief executive Thomas Gangl said.

“Borouge has developed into a leading company in the sector through the strong partnership of Adnoc and Borealis … [it] provides solutions for society and aims to accelerate the growth journey towards a sustainable and circular future,” Mr Gangl said.

The listing of Borouge on the ADX would be among the latest in a string of IPOs on the stock market.

The shares of Abu Dhabi Ports Group, the operator of industrial cities and free zones in the emirate, began to trade on the ADX in February.

In October, Fertiglobe, the world’s largest seaborne exporter of urea and ammonia combined, raised about $795m from its listing on the ADX. That offering came after that of Adnoc Drilling, which reaped $1.1bn from its listing in the same month.

In July, Al Yah Satellite Communications, better known as Yahsat, a unit of Mubadala Investment Company, raised about $730m through its listing.