x Abu Dhabi, UAEWednesday 26 July 2017

Gulf Marine Services shares gain up to 4% on London debut

Offshore vessel provider off to encouraging start in public trading.

Shares of Gulf Marine Services, the latest UAE company to list abroad, gained as much as 4 per cent on their first day of public trading in London.

By midafternoon, the offshore vessel provider was trading at 151.25 pence a share, an overall increase of 12 per cent over Friday’s flotation to a limited circle of investors. The IPO values the company at US$787.1 million, below the company’s upper range estimate of $1 billion.

“We’ve gone for a premium listing and it was as successful as we hoped,” said Duncan Anderson, the chief executive. “The actual position was effectively 100 per cent oversubscribed.”

The flotation allows Gulf Capital, the regional private equity firm, to offload part of its 79 per cent stake in the company. Gulf Capital turned to an IPO after talks with two potential investors to buy off its stake collapsed in 2012 over price and financing issues.

GMS said it would to use the $100m in expected proceeds from the IPO to fund part of a $450m fleet expansion. Nine self-propelling jack-up rigs today serve oil and gas platforms and wind farms in the Middle East, the North Sea and South East Asia.

In the next two years its plans to build five rigs and lease a sixth, bringing down the average age of its fleet from nine years to around five, as well as buy outright two rigs that it currently leases. The average age worldwide is 24.

It has been cushioned from turbulence in the offshore vessel market, which has been plagued by oversupply and falling day rates, because it mainly caters to older fields, said Mr. Anderson.

“We’re in a slightly different space and this is one of the reasons we were quite successful during the roadshow,” he said. “The trend in the industry is toward supporting existing wells. I absolutely agree that offshore support vessels in the greenfield are suffering and they’re very commoditised.”

Market conditions could help it get a good price should it want to buy a competitor, he said.

“In addition to the new build programme we’re looking round at an acquisition, but there are not many companies that match our standard in terms of age and tonnage,” he said.

“As we get bigger the size and scale of the company is such that an acquisition would be a natural process of growing the company.”


Follow us on Twitter @Ind_Insights