ADES Holding Co. and its main shareholders, which include Saudi Arabia’s sovereign wealth fund, are seeking to raise as much 4.6 billion riyals ($1.2 billion) in its initial public offering that’s set to be the kingdom’s largest this year.
The price range has been set at 12.5 riyals to 13.5 riyals a share, valuing the company at as much as 15.2 billion riyals, according to a statement. The oil and gas driller is selling 237.1 million new shares in the offering, while the Public Investment Fund, ADES Investments Holding Ltd. and Zamil Group Investment Ltd. are selling about 101.6 million shares. The total stake being offered is 30 per cent of the company.
Book-building for institutional investors runs until Thursday, while retail buyers will be able to place orders from September 26 to September 28. The final offer price is due to be announced on September 20.
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 account for over 95 per cent of ADES’ backlog as of the end of last year, its prospectus shows.
Usually one of the Persian Gulf’s busiest markets for listings, Saudi Arabia has had a relatively slow start to the year. Less than $900 million-worth of listings have started trading in the kingdom this year, an 82 per cent drop from a year earlier, data compiled by Bloomberg show.
Now, ADES and car rental firm Lumi Rental Co “- which on Friday priced its $290 million IPO at the top of the range “- are set to boost that tally. The outlook for the kingdom’s stocks is also brightening with a 12 per cent rally in the benchmark Tadawul index since March lows after earnings and relatively stable oil prices boosted optimism.
ADES’ revenue from contracts with customers increased to 2.47 billion riyals last year from 1.51 billion riyals in 2021. It made a profit of 397.6 million riyals in 2022. It 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.
EFG Hermes, Goldman Sachs Group Inc., JPMorgan Chase & Co. and SNB Capital are financial advisers and global coordinators for the IPO.