Abraj Energy Services – which plans to raise up to RO93.97mn via initial public offering – has brought in Saudi Omani Investment Company and Schlumberger as anchor investors

Muscat – Abraj Energy Services, an indirectly wholly-owned subsidiary of Oman’s global integrated energy group OQ, announced that the subscription period for its initial public offering (IPO) will commence on February 20, 2023.

OQ (the selling shareholder) is offering up to 377,398,000 shares, equivalent to 49 per cent of the total issued share capital of Abraj, in the IPO. Based on the offer price range the total IPO size is expected to be between RO91.33mn to RO93.97mn, implying a market capitalisation at listing of between RO186.39mn and RO191.78mn.

Abraj, the leading provider of onshore drilling and well services in Oman, has announced the publication of the IPO prospectus and details of the subscription period and process for its initial public offering on the MSX.

In a press statement, Saif al Hamhami, CEO of Abraj, said, “As one of the leading providers of onshore oilfield drilling and well services in Oman, we are confident in our leading domestic position and strong regional growth opportunities. Since announcing our intention to float on the MSX, we are extremely pleased to have received strong interest from investors. Amid robust sector fundamentals, a favourable market and with our diverse service offerings, including drilling, workover and well services, we believe that Abraj presents an attractive proposition for investors.”

Biggest Oman IPO since 2010

Abraj’s initial public offering will be the biggest IPO in Oman since 2010, when Nawras (Omani Qatari Telecommunications Company) – now known as Ooredoo Oman – raised RO182mn via a book-building process IPO.

Abraj said its IPO will be offered in a parallel offering for Category I and Category II investors. The Category I offer (large investors) represents a maximum of 85 per cent of the total offering and will be made available to eligible large and institutional investors in Oman and eligible international institutional investors outside the United States.

The Category I subscription price range for the offering has been set at between 242bz and 249bz per share. The offer for this category is expected to run from February 20 to March 2, 2023.

The Category II offer (small investors) represents a minimum of 15 per cent of the total offering, and will be made to eligible retail investors in Oman. The Category II subscription price is the discounted maximum price of 224bz per share, calculated as the maximum price of 249bz per share less a discount of 10 per cent.

The Category II offer for retail investors is expected to run from February 20 to March 1, 2023.

If there is excess demand in Category II, the allocation to Category II investors may be increased up to a maximum of 35 per cent of the offer size. If the aggregate demand in Category II is less than 15 per cent of the offer size, then after full allocation to Category II Investors, the balance of the shares will be made available to Category I investors for allocation at the offer price, if there is oversubscription in Category I.

All shares will be issued and allotted to investors at the same offer price, which will be determined based on the Category I book-building process. The offer price will be decided by the selling shareholders in consultation with the joint global coordinators and the Capital Market Authority (CMA) on the pricing date, expected to be on or around March 6, 2023.

Any refunds due to Category II investors will be calculated based on the difference between (i) the discounted maximum price and (ii) the offer price less a discount of 10 per cent.

The admission of the shares to listing and trading on the Muscat Stock Exchange (MSX) is expected on or around March 14, 2023.

Anchor investors

OQ has brought in Saudi Arabia’s sovereign wealth fund and global energy services giant Schlumberger as anchor investors for the Abraj IPO.

On February 7, Abraj entered into anchor investment agreements with the Saudi Omani Investment Company (a wholly owned entity of the Public Investment Fund), Royal Court Affairs and Schlumberger Oman & Co (together, the anchor investors).

In aggregate, the anchor investors have committed RO37.58mn to the IPO, representing 40 per cent of the offer size, with their shares subject to a 90 day lock-up arrangement, following admission.

In 2023, Abraj intends to pay a dividend of RO15.4mn for the year ended December 31, 2022, or 20bz per share. In 2024, the company intends to pay a dividend which is the higher of 85 per cent of net profit for 2023 or a six per cent increase on the dividend paid in 2023.

In 2025, the company intends to pay a dividend which is the higher of 85 per cent of net profit for 2024 or a six per cent increase on the dividend paid in 2024.

Ahli Bank, EFG-Hermes UAE Limited and National Bank of Oman have been appointed as joint global coordinators, and Ahli Bank and National Bank of Oman have been appointed as issue managers for the Abraj IPO.