Arabian Drilling IPO raises $712m

Arabian Drilling Company, a Saudi Arabian oilfield services company, raised $712 million from the sale of a 30 per cent stake in an initial public offering amid strong interest from retail investors.

More than 497,170 retail investors subscribed to the public float, which generated demand of 2.18 billion Saudi riyals ($580m).

The company had previously said that 90 per cent of the offering would be allocated to institutional buyers, leaving 10 per cent for retail investors.

In September, the Al Khobar-based company – owned jointly by Saudi Arabia's Industrialisation and Energy Services Company (TAQA) and US-based oilfield services provider Schlumberger – said it had set the final offer price at the top end of the range of 100 riyals per share, which would value it at 8.9bn riyals at listing.

Arabian Drilling, which has a rig count of 45 and serves four key customers in the kingdom, including Saudi Aramco, expects high demand for its services amid the elevated commodity price environment and concerns around energy security as a result of the current macro-political and economic landscape.

Brent crude, the benchmark for two thirds of the world’s oil, surged to a record high of $140 a barrel following Russia’s invasion of Ukraine in February. Crude markets have been tight since the Opec+ group of oil producing countries announced a 2 million barrels-per-day supply cut earlier this month.

Oil markets are now closely watching how a price cap on Russian oil will be enacted by the Group of Seven nations. The cap, which is meant to reduce revenue for Russia’s government, is expected to come into effect on December 5.

Brent crude is currently trading at around $91 a barrel and could hit $100 by the end of the year, according to some investment banks.

“Global investors have come to recognise the significant and integral role we play ― and will continue to play ― in the oil and gas value chain in the kingdom,” said Ghassan Mirdad, chief executive of Arabian Drilling, in a statement earlier this month.

“The investment case is robust and the demand for our shares has ensured a successful institutional fundraising phase.”

Arabian Drilling is the latest company to list on regional equity markets this year.

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.

Saudi-based Power and Water Utility Company for Jubail and Yanbu, better known as Marafiq, said it is pushing ahead with plans to list its shares on the Tadawul.

Borouge, the joint venture between Adnoc and Austrian chemicals producer Borealis, surged as much as 20 per cent on its first day of trading after raising $2 billion in Abu Dhabi’s biggest listing.

The Mena region recorded a 500 per cent annual increase in the number of listings in the first six months of this year, with 24 IPOs raising $13.5bn, according to an EY report. In the second quarter of 2022, nine IPOs raised about $9bn.

Globally, 630 IPOs raised $95.4bn in proceeds during the first half of the year, which is a significant annual drop of 46 per cent in the number of deals and a 58 per cent slump in the proceeds raised, the report said.