Shares of ADNOC Distribution rose as high as AED 2.90 per share on the morning of the first day the company was listed it was listed on the Abu Dhabi Securities Exchange (ADX).
About 45 minutes after the market opened, shares were priced at 2.75, up from the initial price of AED 2.50 per share. The parent company –ADNOC- raised 3.1 billion dirhams ($851 million) from the sale of 1.25 billion shares.
The stock rose as it’s seen as a unique proxy to a recovery in the price of oil at a moment stock gauges in the Middle East underperform global peers amid increasing geopolitical concern. Abu Dhabi’s benchmark stock index has declined more than 3 percent this year, compared with an increase of about 30 percent for the MSCI Emerging Markets Index.
“It’s interesting for investors to own Adnoc Distribution because forecasts are indicating a rise in oil price, which can increase profit margins,” said Issam Kassabieh, equities analyst at Menacorp Financial Services in Dubai. “The offer was oversubscribed to retail by more than 20 times, and having a local fuel distributor listed will add more transparency to the sector in general.”
About 90 percent of Adnoc Distribution shares were bought by qualified investors, while close to 10 percent were sold to individuals.
Last month, Emaar Development, the UAE real estate arm of Emaar Properties, dropped on its first day of trading in Dubai amid escalating geopolitical tensions with Iran and a crackdown on corruption in Saudi Arabia. The stock is down about 9 percent since it started trading.
According to ADX CEO Rashed Al Baloushi, a total of 12,000 investors from 73 countries participated in the IPO’s subscription, with final allocations hitting approximately 90 percent for qualified investors and 10 percent for individual and other investors.
“The offering was multiple times oversubscribed on the qualified investor tranche at a price of AED 2.50 per share. The retail or individual investor tranche of the offering was oversubscribed by 22 times on the original retail tranche size,” he said.
“Owing to this exceptional level of oversubscription, it was decided to increase the retail tranche size to 10 percent of the offering, allowing retail investors to further participate in this unique opportunity,” he added.
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