The United Arab Emirates’ bumper gas listing inevitably invites comparisons with Saudi Aramco . Abu Dhabi National Oil Company (ADNOC) is selling a 4% stake in its gas processing arm to local and international investors through an initial public offering, the biggest one in the Gulf since the Saudi oil giant’s $1.7 trillion market debut in 2019. While ADNOC Gas’s mooted $50 billion valuation is much smaller, foreign investors may find more to like.
In one sense, the UAE entity has similar drawbacks to Aramco. With just over 4% of the stock, non-state investors will have as little say in the gas unit’s future strategy as the Saudi giant, where they hold less than 2%. While ADNOC Gas benefits from a 25-year agreement with its parent to provide gas for its needs, ADNOC takes a share of the resulting profit.
That said, with over two thirds of its gas serving local customers who contribute one-third of its operating profit after tax, ADNOC Gas earnings are arguably more predictable. Gas prices may fall back, but chemicals and LNG look like growth areas, fuelling the company’s expectation that it can grow its dividend by 5% annually to 2027. And the UAE is arguably a more stable regional place to park foreign capital than Saudi.
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