Ades Holding, an oil and gas drilling firm supported by Saudi Arabia’s Public Investment Fund, intends to generate approximately 4.6B Saudi riyals (equivalent to $1.2B) through its initial public offering (IPO).
The company has specified a price range of 12.5 riyals to 13.5 riyals per share for the IPO, as disclosed on Sunday. This development comes after the company declared its intention to list its shares in late August.
Ades plans to sell 338.7 million shares, representing 30% of the company’s total issued share capital. This will involve a combination of 101.6M existing shares (owned by PIF, Ades Investments, and Zamil Group Investment) and 237.1M newly issued shares.
According to the statement, once the Capital Market Authority (CMA) and the Saudi exchange complete the IPO formalities, they will list and trade the offered shares on the Tadawul stock exchange.
Final Offer Price Announcement on September 20
They will conclude the institutional book-building process on September 14 and announce the final offer price on September 20.
According to The National News, they will designate a total of 33.8 million shares, equivalent to 10% of the entire shares available for purchase, for 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 primarily focuses on providing onshore and offshore contract drilling services, along with workover services that involve the maintenance, repair, and improvement of oil production.
The company operates in seven countries: Saudi Arabia, Kuwait, Qatar, Egypt, Algeria, Tunisia, and India. Its operations in India are set to commence this year based on contracts that have already been awarded.
Ades’ key clients comprise Saudi Aramco, the world’s largest oil exporter, the Kuwait Oil Company, and the Qatar-based North Oil Company. Together, these clients account for over 95% of Ades’ backlog as of December 31, 2022.
With a fleet of 85 rigs, the company reported total contract revenue of 1.98 billion riyals in the first half of 2023, achieving an Ebitda margin of 47% during the same period.
Shareholder Distribution and Debt Reduction
As stated by the company, they will distribute the funds raised from the IPO among Ades’ shareholders in accordance with their shareholding in the offered shares. They will also use the remaining proceeds to reduce a portion of the group’s outstanding debt and support its growth.
EFG Hermes, Goldman Sachs, JP Morgan, and SNB Capital serve as financial advisers and global coordinators for the IPO.
Saudi Arabia, the largest economy in the Arab world, and the broader GCC region have witnessed a surge in IPOs, driven by strong investor demand and economic recovery from the COVID-19 pandemic, boosted by high oil prices.
During the second quarter of this year, the volume of IPOs in the MENA region increased by 44%, with significant growth in Saudi Arabia and the UAE, the leading regional economies, according to a report by global consultancy EY.
While the number of listings rose to 13 during the three-month period ending in June, proceeds from MENA listings dropped by 80% to $1.8B, according to EY data.
In the previous year, Arabian Drilling Company, a Saudi Arabian oilfield services firm, successfully raised $712M through the sale of a 30% stake in an IPO, attracting strong interest from retail investors.
Additionally, in December, Saudi Aramco Base Oil Company, known as Luberef, began trading on the Tadawul exchange after raising $1.32B in its IPO. Aramco’s refining unit sold over 50 million shares, representing approximately 29.7% of the company’s issued share capital, with considerable demand from both domestic and international investors.