Abu Dhabi National Oil Company (Adnoc) Distribution, subsidiary of Adnoc, has set the pricing between AED2.35 and AED2.95 per share for its initial public offering (IPO).

The offer period for the first tranche started on 26 November and will close on 6 December. The offer period for a second tranche also started on 26 November and will close on 7 December.

The company is going to sell between 1.25bn and 2.5bn of shares in the fuel distribution arm, which represents between 10 and 20 per cent of the total issued shares in the company. Based on a share pricing of AED2.35 and AED2.95, the total equity value of the distribution business would equate to $8-10bn, with the IPO potentially raising up to $2bn.

The Abu Dhabi National Oil Company for Distribution was established in 1973, and has an approximate 67 per cent market share of fuel service stations in the UAE. The company currently has 360 fuel stations located in the emirates of Abu Dhabi and Sharjah. The firm also operates 235 Adnoc Oasis convenience stores, making it the largest retailer in the UAE in terms of number of stores.

Following the closure of the offer period for the two tranches, Adnoc has set a target to announce the final offer price and final offer size on 8 December. The allocation of the second tranche will also occur on 8 December, with the allocation of the first tranche to be carried out on 11 December. The shares will be listed on the ADX (Abu Dhabi Securities Exchange) on 13 December.

The joint lead managers for the transaction are the local offices of: EFG-Hermes (Egypt), First Abu Dhabi Bank, HSBC (UK). The lead receiving bank for the transaction is First Abu Dhabi Bank. The IPO subscription legal counsel consists of the local Al-Tamimi & Company, legal adviser to the company as to UAE law, US’ Shearman & Sterling, legal adviser to the company on English and Us law and the UK’s Allen & Overy, which is the legal adviser to the joint lead managers on UAE, English and US law.

Adnoc’s decision to IPO part of its fuel distribution business is part of its plans to reduce operating costs and boost efficiency of assets in the wake of lower oil prices. Saudi Arabia is also planning to launch an IPO for part of Saudi Aramco, the world’s largest oil company. Riyadh is planning to offer shares for up to 5 per cent of Aramco through an IPO in 2018.