Abu Dhabi hub carrier Etihad adds banks to $1 billion IPO

Abu Dhabi hub carrier Etihad Airways PJSC has added banks to its planned initial public offering that could raise as much as $1 billion, according to people familiar with the matter.

Abu Dhabi Commercial Bank PJSC, Bank of America Corp., BNP Paribas and Morgan Stanley have been picked as joint bookrunners on the potential share sale, the people said, asking not to be identified as the information isn’t public. Abu Dhabi wealth fund ADQ, which owns Etihad, is targeting a listing for the end of the year, the people said.

Representatives of Morgan Stanley, ADQ, Bank of America, ADCB and Etihad declined to comment while BNP Paribas didn’t immediately respond to a request for comment. 

The fund had already picked Citigroup Inc., HSBC Holdings Plc and First Abu Dhabi Bank as lead advisers for the IPO, Bloomberg News reported in March. Rothschild & Co. is acting as an independent financial adviser to the Abu Dhabi wealth fund.

An IPO of Etihad will create the first publicly-traded major Gulf hub carrier and come amid a rebound in international travel following the pandemic. The Abu Dhabi airline reported a five-fold increase in annual profit in March as it expanded its network to tap growing demand for travel.

In neighboring Dubai, an IPO of rival Emirates was discussed in 2021 as part of a plan by the business hub to sell stakes in state-owned companies to boost trading volumes. Saudi Arabian low-cost carrier Flynas, backed by billionaire Prince Alwaleed Bin Talal, is also planning an IPO in the kingdom as soon as this year, Bloomberg News has reported.

Etihad Turnaround

An Etihad listing would be another example of the United Arab Emirates using its national champions to boost the domestic stock market and diversify the economy away from oil. Ownership of the airline was transferred to ADQ from Abu Dhabi’s Supreme Council for Financial and Economic Affairs in 2022, part of an effort to boost the sheikhdom’s status as a transport hub.

The Persian Gulf has emerged as an active IPO market since late 2021 as governments listed state-owned companies, attracting strong demand from both local and international investors. 

A listing for Etihad would cap a tumultuous few years for the carrier, which has retrenched from a costly growth path devised more than a decade ago.

Under former Chief Executive Officer James Hogan, the airline bought stakes in smaller, cash-hungry carriers across three continents, with the aim of cobbling together enough passengers to propel the Abu Dhabi-based company into the ranks of the global aviation elite. 

The carrier also undertook one of the biggest fleet expansions in the industry, but has struggled to close the gap with rivals, having been founded in 2003 — 18 years after Emirates and nine years after Qatar Airways, which operates a connecting hub in nearby Doha.