Saudi PIF-backed oil and gas driller Ades to list 30% stake on Tadawul

The planned listing could raise about $1 billion

The public share sale will consist of 338.7 million shares, or a 30 per cent stake in the company. AFP

Shareholders in Ades Holding, an oil and gas drilling company backed by Saudi Arabia's Public Investment Fund, will sell a 30 per cent stake of the company as part of an initial public offering.

The kingdom's sovereign wealth fund, Ades Investments and Zamil Group Investment will sell 338.7 million shares in the company, which will include the issuance of 237.1 million new shares through a capital increase, according to a statement on Monday.

The final offer price will be determined at the end of the book-building process, on September 18, the statement said.

The planned listing on the Tadawul stock exchange could raise about $1 billion, Bloomberg reported earlier this year, citing sources.

Saudi Arabia, the Arab world's biggest economy, and the wider GCC region have registered a flurry of initial public offerings 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 the report earlier this month.

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

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

Ades Holding's 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.

Ades Holding'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 the company’s backlog as of December 31, 2022.

Rigs in the offshore Hasbah field, Saudi Arabia. Ades Holding has an aggregate fleet of 85 rigs in seven countries. EPA

The company, which has a fleet of 85 rigs, said total revenue from contracts stood at 1.98 billion Saudi riyals ($528 million) in the first half of 2023.

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

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.

Brent crude, the benchmark for two thirds of the world’s oil, surged to about $140 a barrel after Russia’s invasion of Ukraine last year.

The benchmark has since given up most of its gains and is currently at about $84 a barrel, although Opec+ supply cuts and rising crude demand in China are expected to drive prices higher this year.