Arabian Drilling Co.’s $700 million IPO covered within hours

(Bloomberg) — Arabian Drilling Co., a Saudi Arabian oilfield-services company partly owned by Schlumberger NV, took only hours to garner enough investor orders to fully cover an initial public offering that could raise as much as 2.67 billion riyals ($710 million).

Books are covered across the price range, according to a message sent to investors and seen by Bloomberg News. Arabian Drilling set the range at 90 riyals to 100 riyals per share, valuing the company at as much as 8.9 billion riyals, according to a statement on Wednesday.

Investors snapping up all shares on offer shows demand for Saudi IPOs remains strong even after its stocks became the first in the Gulf to fall into a bear market this week, dragged lower by the recent plunge in oil prices.

Arabian Drilling’s IPO is the largest in the kingdom since pharmacy chain Nahdi Medical Co. raised $1.4 billion, and joins a steady flow of Gulf companies that are tapping markets amid high oil prices. There have already been 22 listings in Saudi Arabia this year, more than any other full-year total, data compiled by Bloomberg show.

Investor demand for listings in the Gulf has been strong, with the region emerging as a bright spot in a quiet IPO market globally. Still, the outlook is darkening with oil falling almost 40% since June on fears that a global economic slowdown caused by central banks’ aggressive policy tightening will hurt energy consumption.

Schlumberger and Industrialization & Energy Services Co., majority controlled by the Saudi wealth fund, the Public Investment Fund, will sell 17.7 million shares in the IPO. Arabian Drilling will sell 9 million shares, using the proceeds to scale up its onshore and offshore fleet and expand operations in the Gulf Cooperation Council region. It counts Saudi oil giant Aramco as one of its main customers, and is looking to capitalize on the state energy producer’s plans to boost oil and gas production.

The bookbuilding period for institutional investors will run to Oct. 5, with the final offer price announced on Oct. 11. HSBC Holdings Plc, Goldman Sachs Group Inc. and SNB Capital are bookrunners for the IPO.