OCI NV, Amsterdam, said on May 5 following board approvals its Fertiglobe joint venture with Abu Dhabi National Oil Co. (ADNOC) has started preparations for a potential initial public offering (IPO) in Abu Dhabi, subject to market conditions, but provided little in the way of further details in its first-quarter earnings statement.
OCI and ADNOC confirmed last month that an IPO of the nitrogen joint venture, headquartered in Abu Dhabi, was being considered (GM April 16, p. 1).
OCI NV CFO and Executive Director Hassan Badrawi told analysts and investors at a company earnings call on May 5 that the IPO is in the early stages of the process, and he could provide little comment on the rationale for the offering at this juncture. However, he said Fertiglobe will become “our vehicle for future growth outside North America and Europe, given the strategic location of the assets and its competitive cost structure, which becomes more evident when gas prices are higher across the globe.”
The IPO will help “crystallize” the value of Fertiglobe’s underlying business in the future, said Badrawi.
Fertiglobe was established in September 2019 following the two companies’ agreement to combine ADNOC’s fertilizer business into OCI’s Middle East and North Africa (MENA) nitrogen fertilizer platform (GM Oct. 4, 2019). The jv has a production capacity of 5 million mt/y of urea and 1.5 million mt/y of merchant ammonia, with OCI currently holding a 58 percent stake and ADNOC a 42 percent stake.
Bloomberg reported last month that Morgan Stanley, Citigroup Inc., HSBC Holdings Plc, and First Abu Dhabi Bank Plc have been appointed as advisers for the IPO.
The business is expected to be next in line for a listing, after ADNOC completes an IPO of its drilling business, according to a Reuters report last month, citing unnamed sources. Media sources this week, citing sources familiar with the deal, reported Fertiglobe could be valued between $5 and $5.5 billion.
Responding to an analyst’s question about Nigeria’s newer urea production facilities coming online, OCI NV CEO Ahmed El-Hoshy said Fertiglobe could “potentially” be a distributor for some of the producers as they build up their output capabilities.