Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
ADNOC Logistics and Services (ADNOC L&S) is optimistic about gaining MSCI index inclusion after increasing its free-float shareholding to 22%. ADNOC, the parent company, recently sold 222 million shares, equivalent to a 3% stake, to institutional investors, raising Dh1.6 billion.
Speaking to Bloomberg in a video interview, ADNOC L&S Chief Financial Officer, Nicholas Gleeson, said, “Our recent secondary placement was oversubscribed seven times in just four hours. It demonstrates really strong demand for the stock and could eventually open the path to MSCI inclusion.”
Previous secondary placements for ADNOC Gas, ADNOC Drilling and ADNOC Distribution have all led to MSCI index inclusion. Since then, those companies have recorded a five-fold increase in daily traded volume, a doubling of average foreign ownership, and more than 40 per cent growth in analyst coverage, according to a recent WAM analysis.
“MSCI inclusion is really important for us, particularly for our international shareholders. Over the past year, many investors have signalled that they’d like to take larger positions in our stock because they understand our growth story,” Gleeson said. “But their ability to participate has been limited by daily liquidity. MSCI inclusion will significantly boost liquidity and widen international investor mandates.”
Gleeson noted that many UAE companies could follow a similar path, offloading shares to tap a strong appetite in the international market. “When I meet with international investors, they say their Gulf positions are underweight. They are looking for the right stocks. Liquidity is key to accessing these opportunities, and we are now seeing a boost.”
As for recent results, ADNOC L&S reported $604 million in free cash flow for Q2 and the first half of this year. “The free cash positions us to relook at how we reward shareholders for their participation in the stock,” he said.
On reinvestment and expansion, the CFO highlighted the company’s recent acquisitions: “We’ve had a couple of really successful M&As in the last three years. We acquired Zakher Marine in late 2022, which has substantially outperformed expectations. Our jack-up barge fleet has grown from 27 to 42 units. At the beginning of this year, we completed the Navig8 acquisition, extending our reach to 19 cities globally and significantly enhancing our tanker chartering capabilities.”
Looking ahead, Gleeson said ADNOC L&S will be selective: “Any M&A investment we make will be in high-quality platforms that extend our international reach and capabilities in energy maritime logistics.”
