Saudi PIF-backed oil and gas driller Ades may raise as much as $1.2bn in IPO

The company has set a price range between 12.5 riyals and 13.5 riyals per share for the offering

Ades Holding will list its shares on the Tadawul stock exchange after the completion of the IPO process. Reuters

Ades Holding, an oil and gas drilling company backed by Saudi Arabia's Public Investment Fund, plans to raise up to 4.6 billion Saudi riyals ($1.2 billion) from its initial public offering.

The price range for the offering has been set between 12.5 riyals and 13.5 riyals per share, the company said on Sunday.

The move follows after company announced in late August its intention to list its shares.

Ades is selling 338.7 million shares, representing 30 per cent of the company’s issued share capital through the sale of a mix of 101.6 million existing shares (held by PIF, Ades Investments and Zamil Group Investment) and 237.1 million newly issued shares.

The offered shares will be listed and traded on the Tadawul stock exchange following the completion of the IPO and listing formalities with the CMA (Capital Market Authority) and the Saudi exchange, the statement said.

The institutional book-building process will end on September 14. The final offer price is due to be announced on September 20.

A maximum of 33.8 million shares, representing 10 per cent of the total offered shares, will be allocated to individual subscribers.

“Ades’ IPO on the Saudi exchange marks an important milestone for the company and is a key step in realising our ambitious growth strategy,” Mohamed Farouk, chief executive of Ades, said.

“Our IPO offers international and retail investors a highly compelling opportunity to invest in a leading global drilling operator with a growing international footprint.”

Ades' portfolio of services primarily includes onshore and offshore contract drilling and workover services, which include maintenance, repair and enhancement of oil production.

It has operations across seven countries, including Saudi Arabia, Kuwait, Qatar, Egypt, Algeria, Tunisia and India. Operations in India will start this year on the back of already awarded contracts.

The company's key customers include Saudi Aramco, the world’s largest oil exporting company, the Kuwait Oil Company and the Qatar-based North Oil Company, which together represent more than 95 per cent of Ades' backlog as of December 31, 2022.

The company, which has a fleet of 85 rigs, said total revenue from contracts stood at 1.98 billion riyals in the first half of 2023.

Its earnings before interest, taxes, depreciation and amortisation (Ebitda) margin was at 47 per cent during the same period.

The proceeds from the IPO will be distributed to Ades’ shareholders based on their shareholding in the sale shares, with the remaining proceeds used to reduce part of the group’s outstanding debt and finance its growth, the company said.

EFG Hermes, Goldman Sachs, JP Morgan and SNB Capital are financial advisers and global co-ordinators for the IPO.

Saudi Arabia, the Arab world's biggest economy, and the wider GCC region have registered a flurry of IPOs amid strong investor demand at a time when economies are rebounding at a quicker pace from the coronavirus-induced slowdown and liquidity has been shored up by high oil prices.

The volume of IPOs on bourses in the Mena region climbed by 44 per cent annually in the second quarter of this year amid robust economic growth, according to global consultancy EY.

Growth in Mena IPO deals was driven by Saudi Arabia and the UAE, the top regional economies, EY said in a report earlier this month.

The number of listings rose to 13 during the three-month period to the end of June, bucking the global slowdown in equity capital markets activity, it said.

However, proceeds from Mena listings dropped by 80 per cent to $1.8 billion, according to EY data.

Last year, Arabian Drilling Company, a Saudi Arabian oilfield services company, raised $712 million from the sale of a 30 per cent stake in an IPO amid strong interest from retail investors.

In December, Saudi Aramco Base Oil Company, better known as Luberef, began trading on the Tadawul exchange after it raised $1.32 billion in its IPO.

Aramco's refining unit sold more than 50 million shares, or about 29.7 per cent of the company's issued share capital, with the listing drawing strong demand from investors in the kingdom and internationally.