MEOG: ADNOC considering share sale in gas arm

Abu Dhabi National Oil Co. (ADNOC) is reportedly contemplating the sale of an additional stake in its gas business, according to sources cited by Bloomberg. The state-owned energy giant may sell between 3% and 5% of ADNOC Gas, potentially raising around $3.5bn if a 5% stake is sold. The decision, however, hinges on market conditions, and no final decisions have been made regarding the size or timing of the sale.

ADNOC Gas, which went public in 2023, has seen its shares increase by approximately 50% since the initial listing. Currently ADNOC holds a 95% stake in the unit. A further sell-down would enhance the company's free float, potentially increasing its chances of being included in broader market indices. Representatives for ADNOC and ADNOC Gas declined to comment on the matter.

The potential sale is set against a backdrop of robust share sales activity in the UAE. Recently, Lulu Retail raised $1.7bn through an offering in Abu Dhabi, while Delivery Hero SE’s Middle Eastern unit, Talabat, is preparing for a $1.5bn initial public offering (IPO) in Dubai. Alongside IPOs, secondary share sales are also on the rise in the Middle East, with significant transactions involving Saudi Aramco, ADNOC Drilling, and Saudi Telecom Co. collectively raising over $14bn this year.

Last year, ADNOC consolidated its gas operations by merging ADNOC Gas Processing, ADNOC LNG and ADNOC Industrial Gas to form ADNOC Gas. The newly formed subsidiary was listed on the Abu Dhabi Securities Exchange (ADX) through an IPO that generated $2.5bn. The offering was oversubscribed by more than 58 times, with investor bids totalling $124bn from Abu Dhabi, Saudi Arabia and Dubai. Initially, a 5% stake was offered, but due to high demand, this was increased to 25%. The shares were priced at $0.65 each, valuing ADNOC Gas at $50bn.

ADNOC Gas is now one of the world’s largest gas processors, with a daily capacity of 10bn cubic feet (283mn cubic metres), eight processing facilities, and a pipeline network extending over 3,250 km.

As ADNOC evaluates its strategic options, the potential sale of an additional stake in ADNOC Gas reflects its ongoing efforts to optimise its portfolio and attract investment amidst dynamic market conditions.

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