UAE Oil Firm Adnoc Raises $1.6 Billion in Stock, Bond Sale

(Bloomberg) --

Abu Dhabi’s state oil firm raised $1.64 billion through a stock and bond sale to institutional investors as the emirate continues to leverage energy assets to generate funds.

The capital of the United Arab Emirates, contains almost all the OPEC member’s hydrocarbon reserves. The government, along with others in the region such as Saudi Arabia and Oman, is seeking to use money from energy assets to build new industries and diversify the economy.

Both deals were completed on Wednesday and saw “significant demand” from regional and international investors, Adnoc said. They came a day after Abu Dhabi’s government raised $2 billion through seven-year bonds, attracting almost $7 billion in demand.

Read: Oil Crown Jewels Are No Longer Off Limits With Deals Ramping Up

Abu Dhabi National Oil Co. sold 375 million shares in Adnoc Distribution PJSC, offering them at 4.36 dirhams ($1.19) each, a roughly 10% discount to Wednesday’s close. The fuel-retail unit fell as much as 9.3% in early trading on Thursday before paring losses to 4.64 dirhams -- down 4.3% -- by 10:12 a.m. in Abu Dhabi.

Adnoc also issued $1.195 billion of senior bonds that mature in 2024 and are exchangeable into the distributor’s stock.

International Expansion

Adnoc sold 10% of the retail subsidiary in 2017 via an initial public offering on the local bourse. It listed another 10% last September. Wednesday’s move will increase the free float to 30% if the bonds, which yield 0.7%, are converted into shares.

Adnoc Distribution, valued at $16.5 billion, is expanding internationally, increasing its gasoline stations in Saudi Arabia and looking to other markets such as Egypt and India.

The two deals were placed at a blended stock price of 4.82 dirhams, which compares with Wednesday’s close of 4.85 dirhams. The bonds will convert at 5.01 dirhams each.

The stock has climbed 24% this year and will be included MSCI Inc.’s index of major emerging-market stocks in Thursday.

Citigroup Inc. and First Abu Dhabi Bank PJSC managed the share offering. They and Abu Dhabi Commercial Bank PJSC led the bond sale.

Since 2016, Adnoc has restructured its business by opening up some operating units and infrastructure to investors. In the past year, the likes of Brookfield Asset Management Inc. and Apollo Global Management Inc. have invested about $15 billion in the company’s gas pipelines and real estate.

Adnoc is also considering IPOs of its drilling business and a fertilizer joint venture called Fertiglobe.

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