Fertiglobe has announced the successful completion of Abu Dhabi National Oil Company’s (Adnoc) acquisition of OCI Global’s entire 50% +1 share stake in Fertiglobe.
Having met all necessary legal and regulatory conditions, Adnoc has formally increased its ownership stake in the company to 86.2%, with 13.8% remaining in free float on the Abu Dhabi Securities Exchange (ADX).
The completion of this transaction marks a major milestone in Adnoc’s chemicals growth strategy, the expansion of its low-carbon fuels business, and supports its plans to become a top five global chemicals player. As part of this strategy, Adnoc will transfer its stakes in existing and future low-carbon ammonia projects to Fertiglobe at cost and when ready for startup, creating a world-class growth platform for low-carbon ammonia as a key energy transition fuel.
Adding 2 mtpa
This includes its two lower carbon ammonia projects in Abu Dhabi and other projects in its global portfolio. On a consolidated basis, the two projects in Abu Dhabi would add ~2 mtpa, more than doubling Fertiglobe’s current merchant ammonia capacity of 1.6 mtpa and increasing its total sellable capacity to 8.6 mtpa of net ammonia and urea combined, in addition to other announced global projects.
Dr Sultan Ahmed Al Jaber, Adnoc Managing Director and Group CEO, said: “Adnoc’s majority shareholding in Fertiglobe marks another milestone in the delivery of our ambitious international chemicals growth strategy and goal to become a top five chemicals player. Fertiglobe is a world-class company, and it will be the vehicle through which Adnoc advances its low-carbon ammonia business, supporting our efforts to enable a just, orderly, and equitable global energy transition. We see significant growth opportunities for Fertiglobe and I am confident that under the continued and dedicated leadership of Ahmed El-Hoshy, the company will deliver greater value for its shareholders.”
El-Hoshy continues in his role as Fertiglobe’s CEO and steps down from his role at OCI Global, where he spent 15 years growing its US and European business in ammonia and methanol via greenfields, brownfields and acquisitions, centralising leadership globally to extract synergies and ultimately generating significant value for shareholders by executing several recent divestments.
Critical role
El-Hoshy has been CEO of Fertiglobe since 2021, playing a critical role in preparing the Company for its initial public offering (IPO), successfully navigating commodity market cycles, and leading Fertiglobe’s consolidation with Adnoc to create a global leader in low-carbon ammonia. With a solid base already established, he aims to continue leveraging Adnoc’s ecosystem to achieve further growth at Fertiglobe while maximising shareholder value.
Fertiglobe’s wider executive leadership remains in place, including Haroon Rahmathulla in his position as Chief Operating Officer and Andrew Tait as Chief Financial Officer.
El-Hoshy commented: “The successful completion of the Adnoc transaction is a historic milestone for Fertiglobe, reinforcing the positive long-term outlook for our business and unique market position, while elevating our future ambitions. Positioned as the vehicle of Adnoc’s plans to establish a global growth platform for ammonia, Fertiglobe is poised to meet the increasing global demand for low-carbon solutions and bring us closer to a more sustainable future.
Integrated ecosystem
“We look forward to joining Adnoc’s integrated ecosystem and unlocking the full potential of our product portfolio while maximising shareholder value and maintaining our commitment to balancing disciplined growth with dividend distributions.”
Fertiglobe will benefit from leveraging Adnoc’s ecosystem to drive disciplined growth within its low-carbon ammonia value chain, including: its strategic access to key energy customers globally, extensive experience in carbon capture and sequestration (CCS) to support low-carbon ammonia production, its leadership in maritime energy logistics, as well as its advanced capabilities in AI across functions.
Progressing low-carbon ammonia initiatives
Robust double-digit Internal Rate of Returns for all existing and future growth projects will be the minimum target for the company as it seeks disciplined and value accretive growth to capitalise on the expected global growth in low-carbon ammonia demand to 24 million tonnes by 2032, from close to zero now.
Expected market tailwinds from increasing applications for low-carbon ammonia will see demand growth exceed supply growth by an estimated 11 million tonnes up to 2032, according to industry consultants.
Fertiglobe will continue to grow its low-carbon fuels business following its success in the recent H2Global bid where it secured €397 million ($433.1 million) of renewable ammonia offtake to Europe at a delivered price of €1,000 per tonne until 2033 in a first-of-its kind contract globally. The limited capital expenditure requirements for this project lead to attractive returns for Fertiglobe.
TA'ZIZ project
Also, in May 2024, Fertiglobe, in partnership with TA’ZIZ, GS Energy Corporation, and Mitsui & Co, Ltd, has taken the Final Investment Decision (FID) on the TA’ZIZ 1 mtpa low carbon ammonia project and has awarded the construction contract to Tecnimont, with production expected to start in 2027.
In line with the company’s disciplined capital allocation policy, which aims to balance value accretive growth and shareholder value, Fertiglobe recently approved an interim cash dividend for H1, 2024 of $150 million (payable this month). Including this dividend, Fertiglobe will have paid $2.42 billion in dividends since its IPO in October 2021, representing one of the highest dividend yields and total return metrics in its sector. Based on the interim dividend announced, the annualised dividend yield is around 5%, further reinforcing the company’s commitment to delivering strong returns to shareholders.
Fertiglobe remains committed to maintaining a robust dividend policy, supported by active value creation initiatives, including its Manufacturing Improvement Plan (MIP) and cost optimisation programme, which are aiming to collectively generate incremental annual Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBTIDA) of $150 million by the end of 2025.--TradeArabia News Service
