DUBAI: The UAE’s biggest convenience-store operator has announced it is going to sell 10 percent of its shares on the Abu Dhabi Securities Exchange (ADX) in an initial public offering (IPO) that could value it at as much as $8 billion.
The announcement was made at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), one of the world’s biggest gatherings of leaders in the global energy business.
Retailers at an energy summit — surely the IPO candidate got the wrong venue for the announcement? Not at all, when the prospective issuer is ADNOC Distribution, the fuel retail and wholesale arm of the Abu Dhabi National Oil Co., the country’s powerful national oil company.
As the intention to float (ITF) document boasts: “Its 235 ADNOC Oasis convenience stores as of Sept. 30, 2017 make it the largest retailer in the UAE by number of stores.”
All those essential pit stops we have to make on the country’s busy highways make for a very good business, generating 200 million financial transactions last year. That’s an awful lot of coffee, crisps and cheeseburgers.
Of course, ADNOC Distribution is much more than that as well. It is the No. 1 retail fuel brand in the Emirates, with 67 percent of the total number of petrol stations in the country; it has the largest market share in the wholesale fuel business; and it is the biggest supplier of fuel to commercial, industrial and government customers throughout the UAE, providing refueling facilities at seven airports.
So, in addition to being a convenience-store operator, it is a beast of an industrial group, generating profits of 1.6 billion dirhams ($435 million) in the first nine months of this year. That sort of return looks certain to generate substantial interest from regional and international investors when the book-building process starts in a few weeks’ time, ahead of an ADX opening in December.
What will also attract investors is the “consistent and progressive” dividend policy the ITF document also details. ADNOC Distribution will pay at least $400 million in dividends, as well as a one-off special payment of $200 million next April. It will pay no less in 2019, and thereafter is pledging a minimum 60 percent of profits each year.
That level of shareholder payout will come from operations boosted by new and better services at the convenience stores and the petrol pump, as well as expanding into new geographies. The potential of Saudi Arabia, the region’s biggest economy, was mentioned by one adviser yesterday.
ADNOC can also leverage up its dominant position in corporate, government and aviation fuel deals.
All that commercial muscle and financial generosity could value the IPO at $800 million, and the parent company (100 percent owned by ADNOC) at $8 billion. These are staggering sums, and a real boost both for the ADX and Abu Dhabi’s economic diversification strategy, which could lead to further big IPOs in the UAE.But to suggest, as some analysts did yesterday, that the ADNOC Distribution IPO gives us a pointer for the forthcoming record-breaking issue by Saudi Aramco is surely wide of the mark.
The ADNOC flotation is very much a segment of the downstream business, whereas with Aramco the stated intention is to sell a 5 percent stake of the whole company, the biggest oil producer in the world, for $100 billion, valuing it at $2 trillion — roughly three times the gross domestic product of the entire UAE.
Aramco has enormous refineries, petrochemicals plants and research and development facilities in the Kingdom and around the world, but so far has not bothered much with petrol stations or convenience stores. Maybe it’s a revenue stream awaiting development?
Pit stops equal profit in ADNOC listing — but it’s no pointer for Aramco
Pit stops equal profit in ADNOC listing — but it’s no pointer for Aramco
CMA CGM, global carriers suspend Gulf transits on security fears
RIYADH: Shipping and logistics across the Middle East were disrupted after major carriers halted routes and ordered vessels to seek shelter following joint US-Israeli attacks on Iran and Tehran’s warning restricting transit through the Strait of Hormuz.
At least 150 tankers, including crude oil and liquefied natural gas vessels, dropped anchor in open Gulf waters beyond the Strait of Hormuz, while dozens more were stationary on the other side of the chokepoint, shipping data showed on March 1, Reuters reported.
The tankers were clustered in open waters off the coasts of major Gulf oil producers, including Iraq and Saudi Arabia, as well as LNG giant Qatar, according to Reuters estimates based on ship-tracking data from the MarineTraffic platform.
This comes as French shipping giant CMA CGM instructed vessels operating in the Gulf to move to safe shelter and suspended some Suez Canal transits as security risks escalated along one of the world’s busiest trade routes.
The Strait of Hormuz, a narrow waterway between Iran and Oman, is one of the world’s most critical energy chokepoints, carrying about 30 percent of global oil supplies along with significant volumes of liquefied natural gas.
The world’s third-largest container line said all vessels currently inside or bound for the Persian Gulf had been instructed to proceed immediately to safe shelter, while certain canal transits were halted until further notice and ships were rerouted via the Cape of Good Hope, according to a statement.
The precautionary move comes as shipping companies reassess operations across the region following military strikes and retaliatory attacks that have heightened security risks along critical maritime corridors linking Asia, Europe, and the Middle East.
“This decision is dictated by safety considerations and is made in compliance with our Bill of Lading Terms and Conditions,” the statement said.
It added: “Customers will be contacted as soon as we have more details of the possible alternative ports where their cargo could be discharged.”
The UK Maritime Trade Operations warned that the regional maritime security environment remains unstable, citing heightened military activity across key shipping lanes.
“The maritime security environment across the Arabian Gulf, Gulf of Oman, North Arabian Sea, Bab al Mandab and the Strait of Hormuz remains highly volatile, with ongoing regional military activity contributing to an elevated threat to commercial shipping,” UKMTO said in an advisory.
The agency added that mariners should expect disruption to navigation and communications systems.
UKMTO said there is “significant military presence and activity across the region” and warned vessels of an increased risk of miscalculation or misidentification near sensitive maritime infrastructure.
Despite circulating reports, the agency said “no official closure of the Strait of Hormuz has been formally communicated to the maritime industry through recognized maritime safety channels.”
Separately, Japanese shipping companies have also begun restricting movements near the Strait of Hormuz, Reuters reported.
Nippon Yusen instructed vessels to halt transit in the area on Feb. 28, while Mitsui O.S.K. Lines said its ships were remaining in safe waters, citing crew and cargo safety as its top priority.
Kawasaki Kisen Kaisha said several of its vessels in the Persian Gulf were placed on standby, noting that, unlike other maritime routes, there are limited diversion options for ships operating near the strait.
“Until the situation stabilizes, we will not attempt to send vessels through the strait, nor dispatch additional ships towards the area,” a spokesperson said.
German shipping group Hapag-Lloyd has also suspended all vessel transit through the Strait of Hormuz until further notice because of the evolving security situation, it said.
This comes as a Palau-flagged oil tanker was hit off Oman’s Musandam peninsula on March 1, injuring four crew members, the country’s Maritime Security Centre said, following drone strikes on the Gulf nation’s commercial port of Duqm, Reuters reported.
The incidents mark the first time targets in or near Oman have been struck since Tehran launched retaliatory attacks across Gulf states after joint US-Israeli strikes on Iran.
The 20-member crew of the Skylight tanker was evacuated after the attack, which occurred about five nautical miles north of Khasab Port in Musandam, according to the maritime authority in a post on X. The centre did not specify what hit the vessel but said four crew members, among them 15 Indian and five Iranian nationals, suffered injuries of varying severity.
Oman’s Musandam peninsula shares control of the Strait of Hormuz with Iran, a strategic chokepoint through which roughly one-fifth of global oil consumption passes.
Earlier in the day, Oman’s state news agency reported that Duqm commercial port was struck by two drones, injuring one expatriate worker. Debris from another drone fell near fuel storage tanks, though no additional casualties or material damage were recorded.
