Saudi PIF-backed ADES Holding to Offer 30% Stake on Saudi Exchange

In what is touted as one of the biggest Initial Public Offering (IPO) on Saudi exchange’s main market Tadawul, ADES Holding along with its subsidiaries, a leading oil and gas drilling and production services provider in the Middle East and North Africa (MENA) region, on Monday announced its intention to proceed with an IPO.

The Capital Market Authority (CMA) of Saudi Arabia on June 21 this year approved the company’s application for offering 338,718,754 ordinary shares, representing 30% of the company’s issued share capital (after the increase) through the sale of a mix of existing shares and newly issued shares. The final pricing of the offer shares will be announced on 18 September 2023.

The sale shares represent 9% and the new shares represent 21% of the company’s issued share capital upon completion of the Offering, totalling 30% of the issued share capital (after issuance of the New Shares and the Company’s capital increase).

The company will also issue 33,871,875 new shares to be allocated to its employees and its subsidiaries, which shall be maintained as treasury shares until they are transferred to the employees in accordance with the provisions of the long-term incentive scheme.

The Offering proceeds after deducting IPO-related expenses will be distributed to the selling shareholders pro rata based on their shareholding in the Sale Shares, with the remaining proceeds used to reduce part of the Group’s outstanding debt and finance the Group’s strategy to achieve its growth objectives.

Offering Overview

The offer shares will be listed and traded on Tadawul following the completion of the IPO and listing formalities with the CMA and the Saudi Exchange.

The offer shares will be offered for subscription to individual investors and institutional investors, including Participating Parties outside the US in offshore transactions in accordance with Regulation S under the US Securities Act of 1933.

Company Overview

The Group is a leading oil and gas drilling services provider in the MENA region, focusing on creating value for its clients by providing competitive service rates through leveraging its low-cost business model.

The Group’s evolving portfolio of services primarily includes onshore and offshore contract drilling and workover services, which include maintenance, repair, and enhancement of oil healthy production.

The Group has global-scale operations across seven countries: the Kingdom of Saudi Arabia, Kuwait, Qatar, Egypt, Algeria, Tunisia, and India. Operations in India will start in 2023G on the back of already awarded contracts.

The Group is one of the largest offshore jackup drilling rig operators globally (by number of jackup rigs).

The Group has established an exemplary track record of expansion in recent years. It has a proven ability to take advantage of market cycles to expand its fleet and acquire fit for purpose assets at attractive valuation and deploy them under existing contracts.

The Group also benefits from leveraging a lean and low-cost operating model, relying on a skilled local workforce, local suppliers and in-house maintenance team, which results in industry-low overheads and unlocks cost efficiencies.

The Group recently effected its planned strategic relocation of headquarters to Saudi Arabia where its main client (Saudi Aramco) and the majority of the Group’s operations, shareholders, and banks are located.

The Group’s key clients are Saudi Aramco in Saudi Arabia, Kuwait Oil Company in Kuwait, and North Oil Company in Qatar, which in aggregate represent more than 95% of the Group’s total backlog as of 31 December 2022 and 82% of revenue from contracts with customers for the year ended 2022.

Other clients include other NOCs and their joint ventures with IOCs, such as Total Energies in Qatar, Oil and Natural Gas Corporation in India, the Gulf of Suez Petroleum Company (GUPCO) and the General Petroleum Company (GPC) in Egypt and ENAFOR in Algeria.