Abu Dhabi National Oil Company (ADNOC) is exploring a potential international listing for its investment arm, XRG, according to three individuals with knowledge of the discussions.

The discussions, which are in early stages, involve listing a minority stake of XRG, established late last year, on an exchange outside the United Arab Emirates. 

Bank of America is advising ADNOC on strategy, including the possibility of an international listing, the individuals said. A potential is estimated to be about five years away.

Before an initial public offering, ADNOC would need to appoint a CEO for XRG and transfer assets into the company, two of the individuals said, according to Reuters. 

According to the report, two additional individuals familiar with ADNOC's strategy but not involved in the deliberations confirmed that an eventual listing is the goal for XRG and aligns with the state oil giant's broader strategy.

ADNOC and Bank of America declined to comment.

XRG, with reported assets of $80 billion, is mandated to pursue global deals in chemicals, natural gas and renewables, as the emirate aims to diversify its portfolio and reduce reliance on oil export revenue.

London or New York exchanges are among the potential listing venues, the three individuals familiar with the discussions said.

London is seen as attractive due to its history as a hub for global oil and gas companies like Shell and BP, despite recent fund outflows, one individual said. A U.S. listing could potentially offer a higher valuation, the person said. Shell has reportedly considered a U.S. listing.

Even a small percentage listing of XRG, if valued in line with ADNOC’s reported asset valuations, could become one of the largest energy IPOs in either jurisdiction.

Saudi Arabia’s Aramco, a neighbouring oil giant, held the world’s largest IPO in 2019, raising $29.4 billion.

United Arab Emirates President Sheikh Mohamed bin Zayed Al Nahyan, who chairs ADNOC’s board, approved an accelerated international growth strategy backed by $150 billion between 2023 and 2027.

ADNOC established a new department, low carbon solutions and international growth, to support the strategy before XRG’s creation.