x Abu Dhabi, UAESunday 23 July 2017

Foreign listing for Abu Dhabi's Gulf Marine Services

Gulf Marine Services, the Abu Dhabi oil equipment operator, is targeting a foreign listing next year in the range of $500 million.

The Gulf Marine Services vessel Endeavour at work on an offshore wind turbine.
The Gulf Marine Services vessel Endeavour at work on an offshore wind turbine.

Gulf Marine Services, the Abu Dhabi oil equipment operator, is targeting a foreign listing next year that could value the company at up to US$500 million.

The region's biggest owner of jack-up barges - rigs that can move on their own and service either an oilfield or a wind turbine - is meeting with investment banks and aims to make a final decision this week, said Duncan Anderson,the chief executive. GMS is 79 per cent owned by Gulf Capital, the local private equity firm.

"We're choosing, but we'll probably go that way to get a listing because we've got too big for our peers for a trade sale," he said in an interview at the company's headquarters in Mussafah. "The scale we've got to very much lends itself to a listing and we're looking at stock markets."

Gulf Marine joins a club of other home-grown energy companies such as Abu Dhabi National Energy (Taqa) and the Sharjah-based Dana Gas that are aiming to list outside of the UAE. Abu Dhabi and Dubai exchanges, often restricted to local investors, offer less liquidity than developed markets such as London.

Gulf Marine is evaluating three oil and gas listing hubs: London, Singapore and New York.

"The UK is very pro-Middle East and they understand the Middle East, but you've also got to remember that Singapore's a very oil and gas-based stock exchange and the US has got huge amounts of liquidity and they do an awful lot of IPOs," said Mr Anderson. "London would probably be a logical step for us … Lamprells and Petrofacs have been there before."

Founded in 1977, Gulf Marine was for most of its existence a small, local provider of the offshore barges oil companies use to house workers and drilling equipment. In 2007 it was bought out by a consortium of investors led by Gulf Capital, which installed new management and pushed for expansion into markets in West Africa and South East Asia in a strategy that appears to have paid off: in those six years Gulf Marine's profits have grown by 750 per cent.

Gulf Marine is finalising a $360m Islamic finance facility that it wants to use to build barges in Mussafah or buy hardly used vessels from other operators. Last year Gulf Capital failed to push through a $500m sale of its stake in Gulf Marine.

"Unfortunately the company that was interested in us was a bit short on price, so the decision was taken by all of us that the company was valued higher than that and that we should grow the business further and aim for a flotation," said Mr Anderson. If the company listed in London, it would be on the same scale as FTSE 250 companies such as the UAE-based Lamprell, he said.

An initial public offering (IPO) would come after what has been a tough year for oilfield service companies, with Saipem and Petrofac hit by operational issues and Subsea 7 and Lamprell issuing profit warnings, said Andrew Whittock, an analyst at Liberum Capital in London.

"What London has been disappointed with recently is a series of profit warnings from oil service companies," he said. "What they will have to show is growth. You've got flat oil prices, not much volume growth upstream, so essentially oil companies have the same amount of money to spend on equipment - so where's the growth coming from?"

The healthcare provider Al Noor Hospitals is the latest Abu Dhabi company to list outside the UAE, closing its share sale in London last week with a value of US$1 billion.

 

ayee@thenational.ae