EFG Hermes concludes advisory on USD 280 million IPO of ADES International Holding on London Stock Exchange Transaction is first IPO on London Stock Exchange on which a regional investment bank has been sole global coordinator, raised total demand in excess of USD 520 million; EFG Hermes’ journey with ADES began with a 2016 M&A advisory and underwriting mandate under the firm’s new merchant banking strategy London, 12 May 2017   EFG Hermes, the leading financial services corporation in the Middle East and North Africa, successfully concluded today its advisory to DIFC-based ADES International Holding on its USD 280 million initial public offering on London Stock Exchange.   EFG Hermes was Sole Global Coordinator and Joint Bookrunner for the transaction, which saw shares in ADES, a leading provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa, admitted to trading on the main market of London Stock Exchange with a standard listing under the stock ticker “ADES.”   ADES raised gross proceeds of USD 170 million in the primary tranche of the offering and will use the net proceeds it receives primarily to fund capital expenditures related to the scale-up of the Group’s operations 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.   Total demand raised for the offering was c. USD 526 million, covering the book 1.88x. The offering was priced at USD 16.50 per share and the market capitalization of the company at admission today was USD 696 million.   ADES’ IPO is the first time a MENA-based investment bank has served as sole global coordinator for an IPO on London Stock Exchange.   “Our Investment Banking team maintained its strong momentum on both the M&A and equity fronts in the first half of this year, cementing its position as the advisor of choice for regional companies looking to tap global equity markets and for international investors seeking exposure to Middle East and North Africa markets,” said Karim Awad. “Taken as a whole, ADES is the first major transaction we have executed as part of the merchant banking strategy we announced last year. Our journey with the company began as ADES undertook a strategic transformation from being the largest local offshore driller into the third-largest offshore player in the wider MENA region. That process began unfolding when we advised the company on its acquisition in November 2016 of three offshore drilling rigs in Saudi Arabia. In addition to advising on the acquisition, EFG Hermes was the mandated lead arranger of debt financing for the acquisition, arranging the funding from a syndicate of regional and local banks and underwriting a portion of the package from our own balance sheet.”   ADES offers offshore and onshore contract drilling as well as workover and production services in the MENA region. The company is pre-qualified in several markets across the world and through its nearly 1,300 employees serves clients including major national oil companies such as Saudi Aramco and Sonatrach as well as global majors including BP and Eni.   “EFG Hermes supported ADES in its strategic transformation into a leading Middle East and Africa offshore services provider, providing counsel on our expansion into Saudi Arabia, arranging the acquisition finance for that transaction, and underwriting a portion of it before leading our initial public offering,” said Ayman Abbas, Executive Chairman of ADES International Holding.  “Low oil prices have resulted in a large number of quality rigs sitting idle and available for hire or acquisition at what we believe are very attractive prices. We believe that our unique positioning, and competitive cost structure allows us to capitalize on these market conditions to grow the business and generate strong risk-adjusted returns for our shareholders.  These factors made it an opportune moment to tap the global equity market to fund our growth plans.” Abbas added that “the success of this IPO in the midst of a challenging global equity capital market environment, and an increasingly volatile oil price environment, is a testament to the uniqueness of the ADES story and reflects the company’s ability to perform well in difficult market conditions.”   While 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, ADES annual revenues expanded at a compound annual growth rate of 34% in the period 2014-16 as it cost-effectively served both international and national oil companies across its footprint. Its backlog grew at a CAGR of 107% in the same period, with a strong track record of renewal.   EFG Hermes has a proven track record of working with shareholders and management teams to build large national and regional players across multiple transactions, noted Awad, pointing to the firm’s work with Integrated Diagnostics Holding Plc (IDH) as an example. “IDH is the only other company that has grown out of Egypt to have a standard listing of its ordinary shares on the London Stock Exchange’s main market as opposed to a GDR program,” Awad said, explaining that EFG Hermes advised on the merger that resulted in the creation of IDH before taking the company public as joint global coordinator and joint bookrunner in 2015.    The ADES IPO caps a busy first half for the EFG Hermes Investment Banking team. Since the start of the year, the firm has acted as: • joint global coordinator and bookrunner on the USD 105 million IPO of ENBD REIT on the Nasdaq Dubai; • sole global coordinator and bookrunner on the IPO of Raya Contact Center on the Egyptian Exchange. • sell-side advisor and led an accelerated bookbuilding processes to place a 10% stake in Kuwait’s Human Soft with leading global institutional investors; • Led an accelerated bookbuilding process to place private equity firm Actis’ final 7.5% stake in leading Egyptian snack foods company Edita Food Industries, also with a large group of leading global institutional investors.   “Our ability to manage and place multiple simultaneous ECM transactions — and to effectively de-risk certain transactions through the selective deployment of our robust balance sheet under our merchant banking strategy — underscores the depth of our team and the extent of our access to leading global institutional investors with proven appetite for the type of unique opportunities presented by MENA markets,” concluded Mostafa Gad, Co-Head of Investment Banking at EFG Hermes.