Oil driller ADES Holding Co. drew 286.9 billion riyals ($76.5 billion) in orders for its $1.2 billion initial public offering in Saudi Arabia, the country’s biggest of the year.
(Bloomberg) — Oil driller ADES Holding Co. drew 286.9 billion riyals ($76.5 billion) in orders for its $1.2 billion initial public offering in Saudi Arabia, the country’s biggest of the year.
ADES, which is backed by the kingdom’s sovereign wealth fund, priced the IPO at 13.50 riyals per share, the top of the range, according to a statement on Wednesday. That values that company at $4.1 billion.
The demand level represents a subscription rate of almost 63 times, indicating strong demand for the IPO in a market that’s been relatively quiet compared with last year. Lumi Rental Co. also drew orders of about $27 billion for its $290 million listing this month.
That could potentially help encourage the Saudi government to move ahead with plans for a secondary offering of shares in Aramco.
Read More: Saudi Arabia’s IPO Revival Meets Keen Investor Demand
ADES 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% of the company.
The offering period for retail investors runs from Sept. 26 to Sept. 28.
Saudi IPOs
The share sale 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% drop from a year ago, which was a blowout year for Middle Eastern offerings, data compiled by Bloomberg show.
Still, the kingdom’s IPO market seems to be stirring back to life on the back of a 11% rally in the benchmark Tadawul index since its March lows. A surge in oil prices, with Brent recently hitting a 10-month high as supply cuts from OPEC+ tightened the market, is likely to further improve sentiment.
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.
Its major clients include Saudi oil giant Aramco, Kuwait Oil Company and North Oil Company in Qatar, which accounted for over 95% 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. EFG Hermes, Goldman Sachs Group Inc., JPMorgan Chase & Co. and SNB Capital are financial advisers and global coordinators for the IPO.
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