Gulf News - ADNOC L&S IPO provides it with just the growth ballast needed

ADNOC announced plans to list a 15 per cent stake in its Logistics & Services subsidiary, a crucial player in global energy industry linked maritime and integrated logistics. The IPO subscription is to commence May 16.

The company seeks to raise around $1 billion from the IPO, which will follow the $2.5 billion one from ADNOC’s gas business in March - and the world’s largest IPO of 2023 to date. ADNOC Gas received over $124 billion in investor orders and has since increased by approximately 28% from its initial offer price.

ADNOC L&S possesses one of the region’s largest and most diverse shipping fleets. It is a prominent owner of self-propelled jack-up barges and runs a substantial integrated energy supply base in the UAE. Providing shipping, logistics, and marine services, the company facilitates the reliable transportation of energy on a global scale, while elevating the UAE’s stature in the shipping and logistics industry.

A fleet powerhouse

With over 500 vessels - including 245 owned - ADNOC L&S caters to more than 100 customers and delivers to over 50 countries. The company serves as a sustainability champion within the UAE’s marine and logistics ecosystem, aiming to reduce carbon intensity per transport by 40 per cent at the end of the decade compared to 2008 levels. The company will also create a low carbon and international growth vertical focused on new energies, gas, LNG and chemicals.

ADNOC L&S has demonstrated a record of achieving organic and inorganic growth, operational excellence, and robust cost discipline, leading to strong and profitable financial performance. Unaudited pro forma figures - incorporating the acquisition of Zakher Marine International (ZMI Holdings) in 2022 - reveal revenue of $2.3 billion and adjusted EBITDA of $599.3 million last year.

Generous on dividend

The company has achieved a CAGR of over 20 per cent in revenue from 2017-22. It targets dividends amounting to $260 million for 2023, with an expected distribution of $65 million in October 2023 and an additional $130 million in April 2024. The company plans to increase the dividend per share at a rate exceeding 5 per cent annual growth.

ADNOC L&S has outlined a strategy for continued growth, backed by a medium-term growth capital expenditure program of $4 billion to $5 billion. This program aims to expand the scope of services offered to ADNOC Group companies while focusing on decarbonization initiatives. On Monday, the board of ADNOC approved accelerated plans to increase the company’s oil production capacity to 5 million barrels per day by 2027.

This ambitious target, originally set for 2030, reflects the company’s commitment to meeting the growing global energy demand. In addition, the board gave its endorsement to a comprehensive five-year business plan, accompanied by a capex budget of Dh550 billion for 2023-27.