June 5, 2018 / 12:24 PM / in 18 days

UAE's ADNOC may sell more of distribution business: sources

DUBAI/ABU DHABI (Reuters) - Abu Dhabi National Oil Company is considering selling another 10 percent stake in its fuel distribution business, which listed in an initial public offering last year, but the timing is uncertain, three sources familiar with the matter said.

An Emirati man is seen near the logo of ADNOC in Ruwais, United Arab Emirates May 14, 2018. Picture taken May 14, 2018.REUTERS/Christopher Pike

ADNOC listed 10 percent of ADNOC Distribution ADNO.AD in December last year, but the sale of another 10 percent would help ADNOC in its aim of joining the MSCI Emerging Markets Index and attract more international investors, two of the sources said.

ADNOC Distribution, the largest operator of retail fuel service stations and convenience stores in the United Arab Emirates, is seeking a minimum free float of 15 percent to improve its chances of joining the index, one of the sources said.

An ADNOC spokesperson said: “We don’t comment on market rumors or speculation.”

“Adnoc Distribution is currently focused on delivering its business plan and objectives to maximize value for its shareholders,” the spokesperson said.

The potential sale was discussed with investors during recent international non-deal roadshows, the three sources said.

If the company received sufficient foreign investor interest, it would consider pushing ahead with the listing this year, the same sources said.

But tepid market conditions, mainly due to global political tensions and muted growth in the domestic economy, could delay the move, they said.

Two of the sources said an obstacle to a listing was that the shares had been trading below the IPO price, making it unattractive for the company to sell and for foreigners to buy if they can purchase the stock cheaper on the public market.

However, the shares closed up at 2.50 dirhams ($0.68) on Tuesday, the same level as ADNOC Distribution priced its IPO in December. The shares are down 6.4 percent down so far this year, compared to a 5.0 percent gain for the Abu Dhabi index .ADI.

Abu Dhabi is pushing its state companies to list on the bourse, hoping to lure foreign investors with privatizations as part of a reform to make the economy less reliant on oil revenues.

Before the initial listing last year, ADNOC said it might sell as much as 20 percent in the fuel distribution unit.

Citigroup (C.N), First Abu Dhabi Bank FAB.AD, HSBC (HSBA.L) and Bank of America Merrill Lynch (BAC.N) were joint global coordinators for that offer and bookrunners alongside EFG Hermes, Goldman Sachs (GS.N) and Morgan Stanley (MS.N).

ADNOC has not yet hired advisers for the sale of the second tranche, the sources said.

Editing by Jane Merriman

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