Oman’s state energy company OQ plans to sell up to 49 per cent stake in its drilling unit, Abraj Energy Services, through an initial public offering, becoming the latest oil and gas drilling company in the GCC to seek a listing amid higher energy prices.
The IPO subscription period is expected to begin next month, subject to receiving the required approval from Oman's Capital Market Authority, Abraj said in a statement on Sunday.
The company intends to list on the Muscat Stock Exchange in March.
"Through this offering, we believe investors have an opportunity to gain exposure to a profitable, growing company with one of the Mena region’s youngest drilling fleets," said Saif Al Hamhami, the company's chief executive.
"We believe the company’s future is very bright, not least because it is already prequalified in four countries to conduct a range of services, setting the stage for international expansion geared towards delivering growth and shareholder value."
Abraj has a fleet of 25 drilling rigs and five workover rigs with a 29 per cent market share in Oman, the company said.
Its remit also includes well services, comprising fracturing, cementing and coiled tubing.
Abraj, which reported a full-year revenue of $323 million in 2021, has an order backlog of $1.5 billion for the years 2023 through to 2031, it said.
Its earnings before interest, taxes, depreciation and amortisation (ebitda) margin reached 37.5 per cent in the first nine months of last year.
All the shares being sold by OQ are existing shares and the offering will be carried out in two tranches. While institutional investors — including those worldwide except the US — will be offered a maximum of 85 per cent, retail investors will receive a minimum of 15 per cent of the total offering.
“We are confident that Abraj is now well-positioned to enter its next phase of growth as a publicly listed company on the Muscat Stock Exchange and look forward to welcoming our new shareholders on our growth journey," said Ayad Al Balushi, Abraj’s chairman.
The deal is the latest in a string of IPOs from the Gulf region, where economies have benefited from higher oil and gas prices. Brent crude, the benchmark for two thirds of the world’s oil, is trading at about $87 a barrel, after falling below $30 in 2020.
In October, 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.
Adnoc Drilling, which is majority owned by Adnoc, was listed on the Abu Dhabi securities exchange in 2021.
The company is looking to expand into the GCC as drilling activity increases, chief executive Abdulrahman Al Seiari told The National in an interview in November.
Last month, shares of Saudi Aramco Base Oil Company, better known as Luberef, began trading on the Tadawul stock exchange after it raised $1.32 billion in its IPO.
While capital markets in the US and Europe have slumped amid inflation woes and fears of a looming recession, equity markets in the GCC and broader Mena region have had a flurry of IPOs.
The Mena market recorded a 500 per cent annual increase in the number of listings during the first six months of last year, with 24 IPOs raising $13.5 billion, according to an EY report. In the second quarter of 2022, nine IPOs raised about $9 billion.
The UAE was the biggest IPO market in terms of the aggregate value of deals, while Saudi Arabia led volume with five IPO deals in the first six months of the year, EY said.
Green ambitions
- Trees: 1,500 to be planted, replacing 300 felled ones, with veteran oaks protected
- Lake: Brown's centrepiece to be cleaned of silt that makes it as shallow as 2.5cm
- Biodiversity: Bat cave to be added and habitats designed for kingfishers and little grebes
- Flood risk: Longer grass, deeper lake, restored ponds and absorbent paths all meant to siphon off water
Tips to keep your car cool
- Place a sun reflector in your windshield when not driving
- Park in shaded or covered areas
- Add tint to windows
- Wrap your car to change the exterior colour
- Pick light interiors - choose colours such as beige and cream for seats and dashboard furniture
- Avoid leather interiors as these absorb more heat
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
