Abu Dhabi National Oil Company (ADNOC) has announced its intention to offer approximately 880 million shares, equating to around 5.5% of ADNOC Drilling's issued share capital, through a bookbuild offering.

This offering is aimed at professional investors in the United Arab Emirates and institutional investors globally, excluding the general public.

The bookbuild process for the offering will begin immediately and is scheduled to conclude on 23 May 2024.

Including the number of shares and the offering price, the final terms are due to be determined at the end of the bookbuilding, ADNOC said.

This offering, consisting solely of ADNOC-held shares, seeks to increase ADNOC Drilling's free float and enhance the liquidity of its shares.

It also aims to diversify the shareholder base and set the stage for ADNOC Drilling's potential inclusion in the Morgan Stanley Capital International (MSCI) Emerging Market Index, subject to meeting the necessary criteria at the next quarterly review.

The inclusion of ADNOC Drilling in the MSCI index would potentially expand its investor base and elevate its profile in the market.

EFG Hermes UAE, First Abu Dhabi Bank, Goldman Sachs International and J.P. Morgan Securities have been hired as joint bookrunners and joint global coordinators for the offering.

ADNOC group CFO Khaled Al Zaabi said: “Since its IPO [initial public offering] in October 2021, ADNOC Drilling has delivered exceptional growth and superior shareholder returns including a recent dividend policy upgrade.

“It is poised for further growth as it unlocks the UAE's world-class unconventional energy resources and utilises innovative technologies through its OFS [oilfield equipment and services] technology joint venture platform Enersol.

“As a committed, long-term majority shareholder, this offering aligns with ADNOC's strategic objectives to enhance the liquidity and free float of ADNOC Drilling, diversify its shareholder base and supports value creation. Securing MSCI emerging market index inclusion also underscores ADNOC's role as a key catalyst and critical enabler of the Abu Dhabi financial market.”

Following the offering, ADNOC's unsold shares in ADNOC Drilling will be under a six-month lock-up period.

ADNOC Drilling's shares closed at Dh4.13 ($1.12) on 22 May 2024. Based on this valuation, the 5.5% stake being offered is valued at $989.6m, reported Reuters.

Currently, ADNOC holds an 84% stake in ADNOC Drilling while Baker Hughes holds a 5% interest.

The latest move comes more than two years after ADNOC raised $1.1bn from an IPO of ADNOC Drilling.