PIF-backed oil driller’s Saudi IPO set to raise $1.2 billion

Riyadh: ADES Holding’s initial public offering is expected to price at the top of the range and raise $1.2 billion in what’s set to be Saudi Arabia’s biggest listing of the year.

The share sale is expected to price at SR13.50 apiece and books are significantly oversubscribed at that level, according to terms of the deal seen by Bloomberg. The final price set to be announced on September 20.

That indicates strong investor demand in what’s been one of the world’s IPO hot spots over the past two years, and could potentially help encourage the government to move ahead with plans for a secondary offering of shares in Saudi Aramco.

At the top of the range, ADES would be valued at SR15.2 billion ($4.1 billion). The oil and gas driller is selling 237.1 million new shares in the IPO, while its shareholders - the Public Investment Fund, ADES Investments Holding and Zamil Group Investment - are selling about 101.6 million shares. The total stake being offered is 30 per cent of the company.

The ADES listing alone will more than double Saudi Arabia’s current IPO haul of just $901 million - the lowest for the equivalent period since 2020 and an 82 per cent drop from a year ago, which was a blowout year for Middle Eastern offerings, data compiled by Bloomberg show.

The kingdom, usually one of the Gulf’s biggest and busiest IPO markets, has had a relatively slow start to 2023 on the back of a stock market decline. But since March, the benchmark Tadawul index has rallied about 12 per cent after earnings and relatively stable oil prices boosted optimism.

Car rental firm Lumi Rental drew orders of about $27 billion for its $290 million listing last week, and on Tuesday the kingdom’s biggest airline said it plans to list a 30 per cent stake in cargo firm SAL Saudi Logistics Services Co.

The PIF 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.

It has a fleet of 85 rigs and operations across seven countries, including India where three rigs will be operating this year, according to its website. Its major clients include Saudi oil giant Aramco, Kuwait Oil Company and North Oil Company in Qatar, which accounted for over 95 per cent of ADES’ backlog as of the end of last year, its prospectus shows.

ADES intends to use the proceeds from the IPO to reduce part of its indebtedness and fund its growth strategy as well as for general corporate purposes.

Bookbuilding for institutional investors ends on Thursday, while retail buyers will be able to place orders from September 26 to September 28.