Saudi oil driller plans $710m IPO to expand operations

Arabian Drilling Company, a Saudi Arabian oilfield-services company partly owned by Schlumberger, has started taking orders for its initial public offering that could raise as much as SAR2.67bn ($710m), the largest in the kingdom since March.

The firm set the price range at SAR90 to SAR100 per share, valuing it at as much as SAR8.9bn, according to a statement on Wednesday.

Schlumberger and Industrialization & Energy Services Co., majority controlled by the Saudi wealth fund, the Public Investment Fund, will sell 17.7 million shares in the IPO, while 9 million shares will be sold by Arabian Drilling.

The IPO is the largest in the kingdom since pharmacy chain Nahdi Medical Co. raised $1.4bn, and joins a steady flow of Gulf companies that are tapping markets amid high oil prices. There have already been 22 listings in Saudi Arabia this year, more than any other full-year total, data compiled by Bloomberg show.

Investor demand for listings in the Gulf has been strong, with the region emerging as a bright spot in a quiet IPO market globally. Still, the outlook is darkening with Saudi Arabian stocks becoming the first in the Gulf to fall into a bear market this week, dragged lower by the recent plunge in oil prices.

Oil has fallen almost 40 per cent since June on fears that a global economic slowdown caused by central banks’ aggressive policy tightening will hurt energy consumption.

Arabian Drilling plans to use the IPO proceeds to scale up its onshore and offshore fleet and expand operations in the GCC region. It counts Saudi oil giant Aramco as one of its main customers, and is looking to capitalise on the state energy producer’s plans to boost oil and gas production.

The bookbuilding period for institutional investors will run to October 5, with the final offer price announced on October 11. HSBC Holdings, Goldman Sachs Group and SNB Capital are the bookrunners for the IPO.