The oil and gas firm ADES announced plans on Monday to be listed on the Saudi stock exchange, a development that comes on the heels of notable setbacks for Saudi stocks.
Backed by the Saudi sovereign wealth fund, ADES said it will proceed with an initial public offering (IPO) of 338,718,754 shares on the Saudi exchange, Tadawul. The offering amounts to a 30% stake in the company and consists of both newly issued and preexisting shares. ADES, Saudi Arabia’s Public Investment Fund and Zamil Group Investment will make the sale. The final price of the shares will be announced on Sept. 18, according to a press release.
ADES was listed on the London Stock Exchange in 2017, but was then taken private in 2021 by the Public Investment Fund and Zamil, a major shareholder in the company.
Bloomberg and Reuters both report that the ADES IPO could raise $1 billion.
Why it matters: The announcement follows some difficulties for ADES’ and other regional IPOs. In May, ADES delayed its planned public offering to the second half of 2023. Saudi Aramco also pushed back its IPO plans that month, following a 19% drop in earnings for the first quarter of the year. Overall, the Middle East registered 23 IPOs in the first six months of 2023 that raised a combined $5.2 billion, a 4% decrease in volume and 60% fall in value year-over-year, according to consulting firm Ernst & Young. The firm noted, however, that the region remains buoyant from an IPO standpoint despite these declines amid the global economic downturn in early 2023.
The Saudi stock market has suffered as well. The Tadawul All Share Index posted nine straight days of losses earlier this month, shedding more than 5% of its value — its worst loss in more than six years.
Saudi telecom firms have performed relatively well, while banking and materials firms, which dominate the index, have struggled. Harry Clynch reported for Al-Monitor on Sunday that the losses amount to a market correction and that Saudi market fundamentals remain strong.
Bloomberg reported that the ADES IPO will be Saudi Arabia’s biggest offering this year.
The ADES offering marks another notable listing from the Gulf’s energy sector in 2023. In March, ADNOC Gas raised $2.5 billion, becoming Abu Dhabi’s largest ever IPO. That same month, Omani oil and gas driller Abraj raised $244 million, its largest listing in over a decade. Oman is also prepping to list gas pipeline company OQ Gas, which could occur this year.
Know more: Qatar is working to revive IPO activity as the Gulf state seeks more foreign investment and economic diversification, Sam Wendel wrote last month in a memo for Al-Monitor PRO.
