Information on the Target

Abu Dhabi National Oil Company Logistics & Services plc (ADNOC L&S) is a leader in integrated energy maritime logistics and shipping. The company provides essential services across the entire value chain of ADNOC and to over 100 global customers in more than 50 countries. With a robust fleet consisting of over 340 owned vessels and an annual charter of over 600, ADNOC L&S ensures a reliable, cost-effective, and sustainable energy flow to global markets.

Since its IPO in June 2023, ADNOC L&S has demonstrated consistent financial and operational performance, realizing a total shareholder return exceeding 170%. The company is poised for continued growth, supported by long-term contracted revenues amounting to AED 95.5 billion and an impressive portfolio of forward contracts totaling over 960 years, providing strong visibility and resilience in its business operations.

Industry Overview in the UAE

The maritime logistics and shipping industry in the UAE has seen substantial growth, bolstered by the nation's strategic geopolitical location and robust economic development. The UAE seeks to diversify its economy away from oil dependency, and the logistics sector has emerged as a critical driver of growth, leading to increased investments in infrastructure and services.

Furthermore, the government’s initiatives to develop Abu Dhabi as a global financial and logistics hub have attracted significant international attention and investment. The establishment of free zones and ports equipped with state-of-the-art facilities has enhanced the country's logistical capabilities, making it a central player in maritime trade and logistics.

Additionally, as global shipping demand continues to rise, companies like ADNOC L&S are well-positioned to capitalize on emerging opportunities, particularly in support of the UAE's energy transition towards more sustainable practices. This shift is expected to further intensify competition within the sector, emphasizing the need for innovation and efficiency in service delivery.

With ongoing investment into digital transformation and environmental sustainability, the UAE logistics sector is projected to continue its growth trajectory. The increased international trade partnerships and the UAE's commitment to expanding its shipping capabilities underscore the importance of this industry to the national economy.

The Rationale Behind the Deal

The recent placement of approximately 222 million shares in ADNOC L&S, valued at around AED 1.16 billion, aligns with ADNOC's strategic focus on enhancing shareholder value and achieving MSCI index inclusion for its listed entities. This offering raises ADNOC L&S’s free float to approximately 22%, significantly improving liquidity and attracting a more diverse investor base.

The transaction was met with remarkable demand, achieving an oversubscription level of approximately 7 times, which reflects the strong investor confidence in ADNOC L&S's robust growth prospects. By increasing its market presence and visibility, the offering not only positions ADNOC L&S favorably within the Abu Dhabi Securities Exchange (ADX) but also sets the stage for greater investor engagement and interest.

Information about the Investor

ADNOC, the majority shareholder of ADNOC L&S, plays a crucial role in the company's ongoing success and growth ambitions. With a reputation for sound management and strategic foresight, ADNOC continues to support ADNOC L&S in executing its long-term growth strategies and ensuring sustainable shareholder value.

As a state-owned entity, ADNOC prioritizes the interests of its shareholders while furthering the UAE's commitment to expanding its role in global energy markets. The company's ongoing investments in technology and sustainability directly benefit ADNOC L&S, enhancing its operational capabilities and competitive edge within the logistics and maritime sector.

View of Dealert

From an investment perspective, the recent offering of ADNOC L&S shares appears to be a strategically sound decision. With the growing demand for maritime logistics and the company's impressive financial performance post-IPO, there is substantial potential for future capital appreciation. The oversubscription of the Offering indicates strong market confidence, which bodes well for ADNOC L&S’s stock performance in the near future.

Additionally, achieving MSCI index inclusion could significantly enhance the company's profile among institutional investors, potentially leading to increased trading volumes and improved market valuation. The planned growth trajectory, including targeted revenue and EBITDA growth rates, adds to the attractiveness of this investment opportunity.

However, investors should also consider the inherent risks of the logistics industry, such as fluctuating global trade patterns and geopolitical uncertainties. Staying attuned to these factors will be crucial for assessing the long-term viability of ADNOC L&S as an investment. Overall, the Offering not only solidifies ADNOC L&S's market presence but also presents a compelling case for investors looking for growth within the evolving UAE logistics landscape.

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