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ADNOC, Netherlands-listed OCI to sell 13.8% of fertilizer unit Fertiglobe in IPO

Highlights

IPO will be ADNOC's third share sale of a unit

Fertiglobe is 58:42 JV between OCI and ADNOC

ADNOC to own at least 36.2% of Fertiglobe post-IPO

Abu Dhabi National Oil Co. and Netherlands-listed chemicals company OCI plan to sell 13.8% of urea and ammonia exporter Fertiglobe in an initial public offering, which will be the UAE energy company's third share sale of a unit.

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Abu Dhabi-based Fertiglobe, a 58:42 partnership between OCI and ADNOC, is expected to list its shares on the Abu Dhabi Securities Exchange in late October, subject to market conditions and obtaining relevant regulatory approvals in the UAE, it said in an Oct. 5 statement. ADNOC is expected to indirectly own at least 36.2% of Fertiglobe's shares post-IPO, while OCI will continue to own the majority of the company.

"The offering is being conducted, among other reasons, to allow the selling shareholders to sell part of their shareholdings to more actively manage and optimize their portfolio of assets, while providing increased trading liquidity in the company's shares and raise the profile of the company with the international investment community," the statement said.

Fertiglobe, which operates in Egypt, the UAE and Algeria, has a net ammonia production capacity of 1.5 million mt/year.

Blue Ammonia

In June, Fertiglobe joined ADNOC and sovereign wealth fund ADQ as partner to develop a one million mt/year blue ammonia facility in the industrial hub of Ruwais in Abu Dhabi. The project, which will be located at the TA'ZIZ chemicals development in Ruwais, is excepted to start up in 2025.

Fertiglobe also partnered this year with ADNOC to sell cargoes of blue ammonia from their Fertil plant in Ruwais to three Japanese customers. The company is also studying the potential use of solar and wind resources to produce green ammonia in Egypt.

Fertiglob's IPO will be the third share sale of an ADNOC unit.

ADNOC sold an 11% stake in ADNOC Drilling in an IPO that raised $1.1 billion, with the unit starting trade on the Abu Dhabi Securities Exchange on Oct. 3. Baker Hughes, which bought a 5 % stake in ADNOC Drilling in 2018, retained its stake.

Helmerich & Payne invested $100 million in ADNOC Drilling's IPO and owns 1% of the unit as part of ADNOC's 11% share sale.

ADNOC Drilling's IPO follows ADNOC's 10% share sale of fuel retailer ADNOC Distribution in 2017, raising $851 million.

Monetizing assets

Last year, ADNOC raised $1 billion from institutional placement of another 10% of shares of ADNOC Distribution, with the parent company retaining an 80% shareholding in the unit.

Since 2019, ADNOC has been monetizing its oil and gas assets as it seeks to unlock cash to fund strategic projects, which include increasing oil output capacity to 5 million b/d by 2030, from around the current 4 million b/d.

In June 2020, ADNOC inked a deal worth more than $10 billion with a group of investors to sell a 49% stake in its gas pipelines a year after striking a similar transaction for its oil pipelines.

A consortium grouping Global Infrastructure Partners, or GIP, Brookfield Asset Management, Singapore's sovereign wealth fund GIC, Ontario Teachers' Pension Plan Board, South Korea's NH Investment & Securities and Italy's Snam will invest in select ADNOC gas pipeline assets valued at $20.7 billion. ADNOC will get upfront proceeds of more than $10 billion from the transaction.

In 2019, ADNOC clinched a $5 billion deal with a consortium that includes GIC, BlackRock Inc., KKR & Co and Abu Dhabi Retirement Pensions and Benefits Fund, to sell them select pipeline infrastructure and collectively hold a 49% stake in ADNOC Oil Pipelines, a subsidiary of the parent company.

ADNOC Oil Pipelines will lease the national oil company's interest in 18 pipelines and give rights to transport crude and condensate from the company's onshore and offshore concessions over 23 years.