Abraj Energy Services, the drilling unit of Oman’s state energy company OQ, has raised $244 million from its initial public offering (IPO), selling more than 377 million shares, equivalent to a 49% stake. The final offer price was set at the higher end of 249 baizas ($0.65) a share due to strong demand from regional, international, and local investors. The IPO was “heavily oversubscribed” and generated more than $2 billion in bids, making it Oman’s largest IPO since 2010. The company’s shares will begin trading on the Muscat Stock Exchange on March 14, subject to regulatory approval.
Ahli Bank of Oman, EFG Hermes, and National Bank of Oman are leading the IPO. Abraj has a fleet of 25 drilling and five workover rigs, and controls a 29% market share in Oman. Its remit also includes well services, comprising fracturing, cementing, and coiled tubing operations. In 2021, Abraj reported full-year revenue of $323 million and has an order backlog of $1.5 billion for the period between 2023 and 2031. The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) margin reached 37.5% in the first nine months of 2022.
The deal is the latest in a series of IPOs from the Gulf region, which has benefited from higher oil and gas prices. Brent crude, the benchmark for two-thirds of the world’s oil, was trading at about $86 a barrel on Tuesday, after falling below $30 in 2020. In October, Arabian Drilling Company, a Saudi Arabian oilfield services business, raised $712 million from the sale of a 30% stake in an IPO amid strong interest from retail investors. Adnoc Drilling, majority-owned by Adnoc, was listed on the Abu Dhabi Securities Exchange in 2021, and in December, 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. Last week, Adnoc raised about $2.5 billion from the sale of a 5% stake in its gas business, marking the world’s largest listing so far this year after the Middle East registered 48 listings in 2022. Middle East IPOs raised more than $23 billion in 2022, compared with $7.52 billion raised from 20 offerings in the previous year, the highest share for the Gulf region since 2019 when Saudi Aramco went public in a $29 billion offering, the world’s largest.
According to Kamco Invest, between announced and rumored IPO plans, the GCC region is expected to float 27 to 39 companies this year. The flurry of IPO activity is a reflection of investors’ confidence in the region’s economy and its growth prospects, especially in the energy sector. As the world continues to transition to cleaner energy sources, many countries in the region are investing heavily in renewable energy, such as solar and wind power. In addition, the region is home to some of the world’s largest oil and gas reserves, which will continue to play a significant role in meeting global energy demand in the coming years.
