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ADNOC announces bold future plan; mulls IPO of services businesses

by Indrajit Sen on Jul 10, 2017


ADNOC's expanded approach to partnerships complements its open operating model, capitalises on key trends in the energy industry and leverages its financial strength and 45-year legacy of successful partnerships.
ADNOC's expanded approach to partnerships complements its open operating model, capitalises on key trends in the energy industry and leverages its financial strength and 45-year legacy of successful partnerships.
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In a major development for the regional oil and gas industry, Emirati energy giant ADNOC has announced it is considering the part-privatisation of select businesses within the group structure, in order to drive efficiency and optimise value from assets in its organisational portfolio.

In an official statement received by arabianoilandgas.com, ADNOC states it is considering the IPO of minority stakes of some of its services businesses ‘which have attractive investment and growth profiles’.

‘Central to ADNOC’s new approach will be the more active management of its portfolio of assets and businesses. Such IPOs would support the growth and expansion of the UAE’s private sector and equity capital markets and will allow the public, and other investors, to invest alongside ADNOC and benefit from the future growth of these assets’, ADNOC mentions in an official press release.

This reformist move by the Abu Dhabi National Oil Company (ADNOC) is along expected lines, especially since Saudi oil behemoth Aramco in January last year made public its plans to sell 5% of its shares through an initial public offering (IPO).

With Aramco galloping ahead with its plans for the stock listing of some of its assets, it was only a matter of time before its Gulf peer ADNOC would follow suit with a similar strategy.

ADNOC has clarified, however, that there will be no stock listing of the group holding company and that the Abu Dhabi government will continue to fully retain possession of its most-prized asset. Moreover, ADNOC will also remain the majority shareholder in any business whose shares would be floated.

The statement did not mention details about the timing of the stock listing, the percentage of shares that it would offer; which capital market/s, at home or abroad, it is eyeing for the IPO; or the assets within its portfolio it has potentially identified for privatisation. We expect information on these crucial aspects, as well as on the financial element associated with this key strategic plan, to emerge in the coming days.

Much like the Aramco IPO decision, which was part of the package of reforms implemented by the leadership in its strive towards Saudi Vision 2030, ADNOC says its transformation scheme is aligned with the objectives of its own 2030 growth strategy to deliver a more profitable upstream business, a more valuable downstream business, and an economic and sustainable supply of gas for Abu Dhabi.

‘It (the endeavour) will enable ADNOC to unlock and maximise significant value from across the group, drive business and revenue growth, optimise performance, and secure greater access for its products in key growth markets’, the statement reads.

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