Spanish oil and gas company Cepsa is set to launch an initial public offering later this year in what could be the biggest listing of an oil group in more than a decade.

The company, which is owned by Abu Dhabi state investor Mubadala, on Monday said it would sell at least 25 per cent of its shares in the public markets.

While it did not disclose the potential price range, people close to the deal estimate that it could be worth as much as €10bn.

Abu Dhabi could be on track for a windfall if the company achieves the valuation it hopes. Its funds took full control of Cepsa in 2011 in a deal valuing it at about €7.5bn.

The listing is set to be largest by an oil company since Rosneft, the Russian oil group, floated in 2006.

The decision to list Cepsa comes as oil prices have posted a strong recovery to near $80 a barrel from below $30 a barrel in early 2016.

Crude’s recovery has sparked a round of dealmaking in the industry, as companies have become generally more positive about the outlook for the first time since the oil price dropped below $100 a barrel back in 2014, setting off a major rethink in the industry, which had become used to high prices in the early years of this decade.

Cepsa is particularly exposed to the downstream or refining sector, with more than 483,000 barrels a day of processing capacity in Spain versus just 175,000 barrels a day of oil equivalent production.

Moody’s Investor Services on Monday said it was upgrading its outlook for the refining sector over the next 18 months from stable to positive, citing strong fuel demand, improving margins and the introduction of new shipping fuel rules in 2020 that will require vessels to burn low sulphur diesel rather than heavy fuel oil.

On announcing the listing on Monday, Musabbeh Al Kaabi, head of petroleum at Mubadala said: “We are proud of our partnership with Cepsa, which is a strategic energy investment for Mubadala and a national industrial champion for Spain.”

He said the Madrid stock exchange, where the listing will take place, was “a natural and strategic fit for Cepsa that will provide wider access to capital markets to support financial flexibility.”

IPIC, Abu Dhabi’s sovereign wealth fund, bought the remaining 48.8 per cent of Cepsa shares that it did not already own from France’s Total for €3.7bn in 2011. IPIC merged with Mubadala last year.

Rothschild is the sole financial adviser for the Cepsa deal, while Santander, Citigroup Global Markets, Merrill Lynch and Morgan Stanley are acting as joint global co-ordinators and joint bookrunners.

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