DUBAI (May 23): The United Arab Emirates' (UAE) biggest oil company and Borealis AG are seeking to raise US$2 billion from an initial public offering (IPO) of their chemicals joint venture in Abu Dhabi, set to be the biggest ever listing in the emirate.

Borouge's IPO offer price has been set at 2.45 dirhams per share, Abu Dhabi National Oil Co (ADNOC) said in a statement on Monday. ADNOC and Vienna-based Borealis are selling three billion shares in Borouge, equating to 10% of the company. That implies an equity valuation of just over US$20 billion for the maker of specialty plastics for manufacturing and consumer goods.

Gautam Adani

Seven cornerstone investors have agreed to subscribe for US$570 million worth of shares in the IPO. The family of Indian billionaire Gautam Adani, Asia's richest man, has committed US$75 million, Abu Dhabi wealth fund ADQ will buy shares worth US$120 million and Alpha Dhabi Holding has committed US$100 million.

The deal is the latest in a string of blockbuster listings from the UAE and neighbouring Saudi Arabia, even as volatility rocks markets elsewhere. The region's IPO boom has gathered steam as oil and gas prices have surged in the wake of Russia's invasion of Ukraine. The UAE is the third-biggest oil producer in the Organization of Petroleum Exporting Countries.

At US$2 billion, Borouge is set to eclipse ADNOC Drilling Co's US$1.1 billion IPO last year as the largest ever in Abu Dhabi, data compiled by Bloomberg showed. Its order books were covered within a few hours, terms seen by Bloomberg showed.

Crude prices have surged about 50% this year, boosting efforts by local energy companies to list assets and support the shift to a post-oil economy. Saudi Aramco is considering an IPO of its trading arm in what could be one of the world's biggest listings this year, while ADNOC sold stakes in two units last year.

Issuers have looked to lure investors with rich dividends. Borouge owners are expected to receive US$975 million in dividends related to financial year 2022 (FY22), rising to at least US$1.3 billion for FY23. Borouge will pay holders in two installments. ADNOC and Borealis will receive a one time US$250 million dividend before the listing.

Founded in the late 1990s, Borouge manufactures plastics used in everything from automobiles and food packaging to medicine vials and piping systems. Its main plant is in Abu Dhabi. The company employs more than 3,000 people and serves customers across the Middle East, Africa, and Asia.

The subscription period starts from May 23 and runs until May 28 for UAE retail investors, and to May 30 for institutional investors. Borouge is expected to start trading on June 3.

Citigroup Inc, First Abu Dhabi Bank PJSC, HSBC Holdings plc, and Morgan Stanley are the joint global coordinators for the IPO.