April 4, 2019 / 2:40 PM / 17 days ago

ADNOC weighs secondary listing overseas for distribution business -sources

DUBAI, April 4 (Reuters) - Abu Dhabi National Oil Company (ADNOC) is considering a secondary listing for its subsidiary ADNOC Distribution overseas, three sources told Reuters.

In 2017 ADNOC listed 10 percent of ADNOC Distribution, the largest operator of petrol stations and convenience stores in the United Arab Emirates, on the Abu Dhabi Securities Exchange.

Reuters reported last June that ADNOC was considering selling another 10 percent stake in its fuel distribution business.

ADNOC Distribution was seeking a minimum free float of 15 percent to improve its chances of joining the MSCI Emerging Markets Index and attract more international investors, a source told Reuters at the time.

One of the sources said ADNOC was considering listing ADNOC Distribution on New York’s Nasdaq exchange, while a second source added that a London listing had also been discussed.

The company started discussing an international listing “a while ago,” said one of the sources, adding that there was no imminent plan to proceed with the transaction.

The sources declined to be named due to commercial sensitivities.

The sale of more shares in ADNOC Distribution, should it materialise, would be the latest sign that the Gulf’s giant oil companies are increasingly turning to international capital markets to fund expansion.

Before oil prices crashed in 2014, state energy firms in the Gulf largely financed themselves with money from their governments. But low oil and gas prices put government finances are under pressure.

Saudi state oil giant Aramco is currently meeting global investors ahead of an inaugural international bond, after postponing its planned initial public offering last year until 2021.

For ADNOC Distribution, an obstacle to listing now is that its shares have mostly been trading below their IPO price, making it unattractive for the company to sell and for foreigners to buy if they think they can purchase the stock cheaper on the public market at a later date.

On Thursday the shares traded at the IPO price of 2.5 dirhams, after the company announced a dividend increase.

Before the initial listing in 2017, ADNOC said it might sell as much as 20 percent in the fuel distribution unit. (Reporting by Hadeel Al Sayegh; Editing by Susan Fenton)

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