PIF-backed oil driller jumps 21% after year’s biggest Saudi IPO
The company drew orders of almost $77b from institutional investors for its $1.2b offering
Riyadh: Shares in oil driller ADES Holding jumped as much as 21 per cent in Riyadh after the kingdom’s largest initial public offering this year, even as the conflict between Israel and Hamas roiled regional markets.
ADES, backed by the kingdom’s sovereign wealth fund, opened at SR14.84, up from the offering price of SR13.50 at the top of the range. It then rose to as high as SR16.30. The company drew orders of almost $77 billion from institutional investors for its $1.2 billion offering, showing demand for share sales in the kingdom is strong.
The debut follows an 11 per cent drop in the kingdom’s benchmark Tadawul index since late July. The market had rallied in the months before that on the back of high oil prices.
The conflict between Israel and militant group Hamas, which was sparked after the latter’s surprise attack on Saturday, led to sharp falls across regional markets on Sunday. While stocks recovered slightly on Tuesday, the escalation of tensions adds to uncertainty that could disrupt the Middle East’s strong run of IPOs.
The IPO of ADES brings Saudi Arabia’s total listing proceeds for the year to $2.4 billion, effectively more than doubling them, data compiled by Bloomberg show. The kingdom’s IPO market was at a standstill at the beginning of the year as a drop in its stocks through to March put a halt to listing activity. The number of IPOs has since bounced back in what is usually the Gulf’s biggest and busiest listings market.
The Public Investment Fund teamed up with the major owners of then London-listed ADES to take the business private in 2021, in a deal valuing the company at about $516 million. ADES, which provides oil and gas drilling and production services in the Middle East and North Africa, has since grown through acquisitions.
In total, 30 per cent of the company was sold via the IPO. ADES sold 237.1 million new shares and its shareholders - the PIF, ADES Investments Holding and Zamil Group Investment - offloaded about 101.6 million shares.
ADES intends to use the proceeds to reduce part of its indebtedness and fund its growth strategy as well as for general corporate purposes. EFG Hermes, Goldman Sachs Group Inc., JPMorgan Chase & Co. and SNB Capital were financial advisers and global coordinators for the IPO.