IHC’s Alpha Dhabi transfers 25% stake in US firm to ADNOC Drilling JV

Abu Dhabi’s Alpha Dhabi Holding said it has transferred its 25 per cent stake in US drilling technology firm Gordon Technologies to an investment joint venture (JV) with ADNOC Drilling.

The $180m equity stake marks the initial strategic investment by Alpha Dhabi in the venture, which will invest up to $1.5bn to acquire technology-enabled companies in energy and oilfield services.

The investment platform and the contribution of Gordon’s 25 per cent share capital, is expected to bring value accretive returns to both shareholders and will be synergistic with ADNOC Drilling’s business.

The JV is also expected to support the Abu Dhabi-based drilling company’s long-term dividend growth profile.

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Founded in 2014, Gordon is one of the leading measurement while drilling technology providers in the US. With an expected revenue of more than $230m in 2023, Gordon supports efficient drilling operations for its customers through leading performance metrics and cost efficiencies.

The company occupies a unique position, particularly in high-temperature applications, with reliability measures significantly outperforming the industry average.

“Since Alpha Dhabi’s minority stake acquisition of Gordon in 2022, we have supported its growth strategy in the US market and put the foundations in place for expansion to the Middle East region,” said Hamad Al Ameri, managing director and group CEO of Alpha Dhabi.

Gordon has no debt, and its acquisition is economically accretive to Alpha Dhabi-ADNOC Drilling JV from profitability, valuation multiple, cash flow generation and dividend potential standpoint. Its free cash flow yield is expected to surge by more than 10 per cent in 2023.

Alpha Dhabi, ADNOC Drilling investment JV

Alpha Dhabi and ADNOC Drilling said their investment venture has been incorporated into the Abu Dhabi Global Market.

The two entities established a strategic partnership to invest up to $1.5bn to acquire technology-enabled companies in energy and oilfield services last November.

ADNOC Drilling owns a 51 per cent stake in the venture, Alpha Dhabi holds a 49 per cent shareholding and Lunate Capital will provide asset management support to the investment platform.

Leveraging ADNOC Drilling’s scalable technology ecosystem, the JV will be jointly controlled by ADNOC Drilling and Alpha Dhabi and is empowered to invest in value-accretive businesses globally across the oilfield services and energy value chain.

The venture is expected to further develop and scale up ADNOC Drilling’s integrated drilling and oilfield services offering and enhance operational efficiencies. The company is the Middle East region’s largest national drilling company by rig fleet size and seeks to bolster its fleet to 142 rigs by the end of 2024.

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