UAE’s Adnoc in talks with banks for big syndicated loan

State-owned energy giant Abu Dhabi National Oil Co (Adnoc) is in talks with regional and international banks to obtain a syndicated loan worth several billion US dollars, banking sources familiar with the discussions said on Monday.

The loan will be “huge”, two bankers said; a third said it was expected to be in a range of $4bn to $5bn. The facility would have various maturities of up to five years.

The loan financing is one of a number of fund-raising plans which the company is considering. It is also discussing the possibility of issuing a project bond that could be as large as $3bn in size, bankers said, declining to be named because of commercial sensitivities.

An Adnoc spokesman told Reuters: “As announced on July 10, Adnoc is expanding its partnership model and creating new partnership and co-investment opportunities across all areas of its value chain.

“Alongside this new partnership model, Adnoc is also taking a more active approach to managing its portfolio of assets and balance sheet to both unlock value and drive growth.

“Furthermore, as per the normal course of its financial planning, Adnoc is also looking at the most effective capital structure for the efficient management of its business.”

Adnoc’s financing strategy is driven by Sultan al Jaber, the company’s group chief executive, who took charge last year.

“Adnoc is looking at funding for different projects and talks have just begun – nothing has been finalised,” said a regional banker.

The company has not appointed banks yet to lead the planned loan transaction, but a Dubai-based banker said “things will move quickly” and a mandate was likely to be awarded within the next couple of weeks.

Adnoc is also working on an initial public offer of shares in its retail unit, Adnoc Distribution, which could raise up to $2bn, sources told Reuters last week.

First Abu Dhabi Bank, HSBC, Bank of America Merrill Lynch and Citigroup have been mandated for the IPO, the sources said.

US boutique investment firm Moelis & Co is advising Adnoc on its funding strategy, while Rothschild has been hired as adviser on the flotation of Adnoc’s distribution unit.

The energy producer manages 95 per cent of proven oil reserves in the United Arab Emirates and 92 per cent of the country’s gas reserves.