October 10, 2018 / 7:10 PM / 8 days ago

Moelis' advisory mandate on ADNOC business review ends this year: sources

DUBAI (Reuters) - U.S. investment bank Moelis’ mandate to advise the Abu Dhabi National Oil Company (ADNOC) on strategy and investment opportunities across the oil giant’s businesses will end this year, sources familiar with the matter said.

FILE PHOTO: An Emirati man is seen near the logo of ADNOC in Ruwais, United Arab Emirates May 14, 2018. REUTERS/Christopher Pike/File Photo

ADNOC signed a one-year contract with Moelis in 2017, which was later extended until the end of this year. Starting from next year, however, ADNOC will award mandates on a deal-by-deal basis, said one of the sources close to the matter, speaking on condition of anonymity.

Moelis declined to comment. ADNOC was not immediately available to comment.

ADNOC appointed the boutique investment bank with a strategic advisory mandate aimed at creating and expanding partnerships and co-investment opportunities across new parts of Adnoc’s businesses.

The Abu Dhabi state-owned company was seeking to attract billions of dollars in investments through joint ventures as it prepared to publicly list shares in some of its units.

Moelis advised ADNOC on a deal announced this week with Baker Hughes, the world’s second-largest oil services company, which will take a 5 percent stake in ADNOC’s drilling unit for $550 million.

One of the sources said ADNOC will continue to work with Moelis until the Baker Hughes transaction is finalised later this year.

Boutique advisory firms face increasing competition from bigger banks in the Gulf, where government and large government-owned companies tend to establish banking relationships based on banks’ lending commitments. Some of these clients have increased borrowing to offset a drop in oil prices.

New York-based Moelis, founded by veteran U.S. dealmaker Ken Moelis in 2007, is well established in the Middle East, having made its name there seven years ago by advising the Dubai government on the $25 billion debt restructuring of Dubai World.

It was also hired by Saudi Aramco to advise it on its plan for a mammoth initial public share offer. Sources later told Reuters the plan had been shelved, though Saudi Arabia’s crown prince insisted in an interview with Bloomberg the stalled plan will go ahead.

Over the past year, ADNOC, which manages almost all of the proven oil reserves in the United Arab Emirates, has carried out a number of fundraisings as part of an overhaul of its capital structure.

These included several loans, its first public bond issue, and the listing of a 10 percent stake in its distribution unit late last year, in what was the largest IPO in Abu Dhabi for a decade.

ADNOC raised a jumbo $6 billion loan last year with a group of banks including JPMorgan and HSBC, sources said at the time.

Additional reporting by Rania El Gamal; Editing by Jan Harvey

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