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Monday, 8 March 2021

Saudi wealth fund to take top offshore outfit ADES International private

Saudi Arabia’s Public Investment Fund is looking to take leading regional oil and gas services company ADES International private. The USD 161 mn transaction would value the UAE-based rig player, which grew out of Egypt and remains the country’s largest offshore oil and gas service provider, at some USD 516 mn.

ADES’ independent directors are recommending shareholders accept the offer, they said in a disclosure carried by the London Stock Exchange’s regulatory news service this morning. The Saudi wealth fund has offered to fund the transaction at USD 12.50 a share — a 40% premium to the company’s USD 8.95 share price at the end of last week.

ADES International’s share price surged on the news: ADES International’s shares are up over 34% to hit USD 12 on the news.

In detail: The transaction will see Innovative Energy Holding acquire and take private ADES International Holding. Innovative Energy is a newly established company that will be jointly owned by the PIF, Zamil Investments and ADES Investments. ADES Investments currently holds 64% of ADES International Holding, while Zamil holds a 5% stake. Both companies will transfer their holdings to Innovative Energy after an agreement is finalized. The disclosure does not specify whether the PIF will hold the full remaining stake. The company’s shares would then be delisted from the LSE.

Why the delisting? Innovative Energy says that “as a private company … [ADES International] will benefit from a longer term approach to strategy and decision making and that ADES International will have greater flexibility to pursue strategic opportunities.”

What ADES said: The company’s board of directors judged the offer to be “fair and reasonable” and will recommend that shareholders accept it, according to the disclosure.

Why this matters: ADES is Egypt’s largest offshore driller and started life here in Egypt before going public in London in 2017. It has since expanded into Kuwait and Algeria and ramped up its revenues from Saudi Arabia in the three years since its IPO through a series of acquisitions. There’s plenty more on the company in its investor presentation here (pdf).

Advisors: EFG Hermes is acting as ADES’ financial advisor while Moelis & Company is providing financial advice to the Public Investment Fund. Investec Bank and Canaccord Genuity are acting as the corporate brokers for ADES.

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