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Tuesday, 4 April 2017

ADES International announces intention to float on LSE

IPO Watch- Oil and gas drilling and production services provider ADES International Holding announced its intention to proceed with a global offer of its existing shares on the London Stock Exchange yesterday. The Dubai International Financial Centre-based company is planning to raise up to USD 170 mn through the issue of new shares. The selling shareholder is also offering for sale a block of existing shares. ADES offers offshore and onshore contract drilling as well as workover and production services in Egypt, Algeria and Saudi Arabia with clients including Aramco, Sonatrach, BP, Eni. ADES will use the net proceeds of the global offer received by it to fund capital expenditures related to its scale-up in Egypt, Saudi Arabia and Algeria and to fund ventures into new markets including Gulf Cooperation Council countries “in the belief that this will create substantial risk-adjusted returns for shareholders.”

Why it’s so interesting: The company, which has deep roots in Egypt (the market accounts for about 44% of its backlog) has consistently grown its top line and EBITDA through the oil price slump by focusing on recurring revenues. “Oil has fallen from a high of USD 126 per barrel in 2012 to c. USD 57 per barrel at the end of last year, dipping below USD 30 per barrel in the interim. Our annual revenues have expanded at a compound annual growth rate of 34% in the period 2014-16 as we have cost-effectively serviced a number of profitable contracts with a strong track record of renewals. Our backlog has grown at a CAGR of 107% in the period 2014-16,” CEO Mohamed Farouk said. The company, which has 100% USD-denominated revenues and a majority EGP cost base, posted an EBITDA CAGR of 46% in 2014-16.

EFG Hermes is sole global coordinator and joint bookrunner for the offering. Citigroup Global Markets Limited is joint bookrunner. White & Case LLP is counsel to ADES, while Baker McKenzie is counsel to the sole global coordinator and joint bookrunners. Inktank Communications is investor relations advisor to the company.

Meanwhile, Raya Contact Center announced indicative pricing for its initial public offering of some 49 mn shares, saying it would price the offering in the range of EGP 16.00 and EGP 17.91 per share. At the top end of the range, the company could raise as much as EGP 877 mn, by our calculations. Shares will be offered to institutional and retail investors at the same price. The selling shareholder plans to subscribe to an EGP 100 mn capital increase to inject some of the proceeds from the sale back into the company, which CEO Ahmed Imam says is “in the midst of [a] transformation [into a] multinational BPO service provider.” Read the price range announcement here. EFG Hermes is sole global coordinator and bookrunner for the IPO. Dechert LLP is international counsel to the issuer, Zaki Hashem and Partners is local counsel to the issuer, Matouk Bassiouny is local counsel to the sole global coordinator and bookrunner.

Finally, consumer electronics, retail and luxury car player MM Group for Industry and Trade has concluded its institutional offering and priced its IPO at EGP 5.96 per share. Total demand generated by the institutional offering was in excess of EGP 5.5 bn, making it about 9.2x oversubscribed. At that price, MTI’s market cap on the first day of trading will be EGP 2.4 bn. The subscription period for the retail offering will end on Thursday and trading in the company’s shares is due to begin on 11 April. Beltone Investment Banking is the sole global coordinator and bookrunner, while Zaki Hashem and Partners is serving as local counsel.

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