Abu Dhabi’s state-owned Mubadala Investment Company has delayed a planned initial public offering of a 25% stake in Spanish integrated oil and gas company Cepsa, fearing that that the market's instability might affect the valuation.
"The most recent international economic developments have sowed considerable uncertainty in international capital markets," Cepsa said in a statement.
The company, which is wholly-owned by Abu Dhabi’s Mubadala Investment Company, noted that the investors’ appetite to participate in stock market listings like Cepsa has reduced.
“Recent market conditions deteriorated significantly, the feedback from potential investors reinforced our view of Cepsa’s value and the strengths of the underlying business. As a long-term investor, we will consider returning to the market when we believe conditions are favorable,” said Musabbeh Al Kaabi, Chief Executive Officer of Mubadala’s Petroleum & Petrochemicals platform and a member of the Mubadala Investment Committee.
The decision has officially been communicated to the National Securities Market Commission (CNMV).
Cepsa's IPO, which would have valued the company between $8.1 billion and $9.4 billion, was reportedly expected to be the largest issuance by an oil company in more than a decade. However, geopolitical risks have led to increased market turmoil that have resulted in heavy losses for many companies. These factors have, in turn, prompted companies to slow down their expansion plans.
Cepsa has a strong presence in Abu Dhabi. In February, the company signed an agreement with the Abu Dhabi National Oil Company (ADNOC) that awarded it a 20% stake in Abu Dhabi’s offshore Sateh Al Razboot (SARB) and Umm Lulu concession, as well as two other smaller ones.
The company reported a net profit of €335 million ($388.2 million) in the first half of 2018, while investments surpassed €1.6 billion ($1.85 billion), largely due to the investment in several oil production fields in Abu Dhabi.