Omani driller Abraj Energy’s IPO to launch on Feb 20

The Initial Public Offering (IPO) of wholly-state owned Abraj Energy Services – a subsidiary of OQ Group – commences on February 20, 2023 with 49 per cent of the total issued share capital of the drilling services company earmarked for public subscription.

Abraj Energy said in a post on Thursday that the Capital Market Authority (CMA) had approved the prospectus of the company for its debut IPO on the Muscat Stock Exchange (MSX).

A total of 377.298 million shares will be offered to institutional and retail investors in two tranches during the 10-day IPO spanning the February 20 to March 2, 2023 timeframe. Of this total, the lion’s share representing 65 – 85 per cent of the offer size (equating to 246.308 million – 320.788 million), is reserved for large (institutional) investors during Category 1 of the IPO starting on February 20 and concluding on March 2, 2023. The subscription price for Category 1 investors has been set in the range of 242 bzs to 249 bzs per share.

According to Abraj’s IPO Office Notice, the aggregate allocation to Category I investors may be reduced to a maximum of 65 per cent of the Offer size if there is excess demand in Category II (small investors). “If the aggregate demand in Category II is less than 15 per cent of the Offer size and there is excess demand in Category I, 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 Prize,” it explained.

For Category II (small investors), the Offer Size ranges from 15 to 35 per cent of the IPO (corresponding to 56.609 million to 132.089 million shares) with the subscription price set at a discounted maximum price of 224 bzs per share. The offer period runs from February 20 to March 1, 2023.

The allocation to Category II investors can rise to 35 per cent of the Offer Size based on small investor appetite, according to Abraj. “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 subscription in Category 1,” the Office Notice explained.

Importantly, the Abraj IPO has lined up three anchor investors who have made “irrevocable commitments” to subscribe to the offer at the maximum price. The list includes Saudi Omani Investment Company (a wholly owned entity of the Public Investment Fund of Saudi Arabia), Royal Court Affairs – Sultanate of Oman, and Schlumberger Oman. Together, they account for 40 per cent of the IPO size.

Established in 2002, Abraj is the largest drilling contractor in Oman with a 29 per cent market share. The company’s portfolio of services include drilling, workover and well services which includes fracturing, cementing and coiled tubing. Abraj has to date around $1.5bn worth of order backlog for the years 2023 through 2031.

Abraj’s shares, post the IPO, will be listed on the Muscat Stock Exchange on March 6, 2023. Parent company OQ will retain a minimum 51 per cent of Abraj’s equity after the IPO.