Press Release

March 31, 2014

Gulf Capital completes the successful IPO of Gulf Marine Services on the London Stock Exchange generating gains of over $600 million

Gulf Capital, one of the largest and most active alternative asset managers in the Middle East, announced today that one of its portfolio companies, Gulf Marine Services (“GMS” or the “Company”), successfully completed its initial public offering on the London Stock Exchange on March 14th, 2014.  GMS is the leading operator of self-propelled Self Elevated Support Vessels (“SESV”) in the Middle East and in the Southern North Sea in Europe, with clients in the offshore oil and gas industry and wind turbine installation sector.  The offering valued the equity of the Company at £ 472 million (US$ 783 million) at the offer price of 135 pence and the total proceeds raised at the IPO were £ 179 million (US$ 296 million – after exercise of the over-allotment option).  68% of the investors in the IPO were from the UK, 25% from the Middle East with the balance from the US and the rest of the world.  Gulf Capital, through its GC Equity Partners II Fund, reduced its shareholding in the Company from 80.0% to 49.7% after exercise of the over-allotment option (“Greenshoe”).  Following this successful IPO and an earlier dividend distribution in March 2013, Gulf Capital’s GC Equity Partners II Fund will have generated total gross gains in excess of US$600 million including the Fund’s remaining shareholding in GMS (valued at the IPO price).  The IPO was strongly oversubscribed and the shares gained so far 19 percent, rising from 135 pence at the IPO pricing on March 14th to 160 pence as at close of March  21st, 2014.  

BofA Merrill Lynch and Barclays Bank PLC acted as Joint Global coordinators, Joint Bookrunners and Joint Sponsors of this offering, J.P. Morgan Cazenove as Joint Bookrunner, and Abu Dhabi Islamic Bank PJSC and Abu Dhabi Commercial Bank PJSC as Co-Lead Managers. Rothschild acted as Financial Adviser to the Company.

Commenting on this transaction, Dr. Karim El Solh, CEO and Managing Partner of Private Equity at Gulf Capital, said:  “We are extremely happy with the performance of GMS under the leadership of the current Management.  During the seven year ownership period of Gulf Capital, GMS has increased its net profitability by 1117% and has grown from being a local UAE company to becoming a dominant global leader in its industry.  The financial performance of GMS has been stellar, registering an annual compound growth rate of 39.6% in revenues, 49.2% in EBITDA and 51.7% in Net Profits over the last seven years.  At the current IPO price, total gross gains on the GMS investment for Gulf Capital’s GC Equity Partners II Fund are in excess of US$ 600 million, including the Fund’s remaining shareholding in GMS.  The GMS investment represents the template for future control growth buy-outs in the Middle East and is a good testimony of the strong returns that can be generated from private equity in the Gulf region.”

Mr. Richard Dallas, Managing Director of Private Equity at Gulf Capital, added: “This is a landmark transaction not only for Gulf Capital, but also for the business community in Abu Dhabi and the Middle East. It demonstrates that our region is capable of growing world class businesses capable of competing internationally. GMS demonstrates the power of partnership between management and Private Equity, especially when there is a complete alignment of interests. We have also been fortunate to have partnered with Horizon Energy LLC and Al Ain Capital LLC on this unique investment opportunity.  We are also grateful for the support of the UAE financial community in building this business to a stage allowing us to reach a great milestone of floating the Company on the London Stock Exchange. The capital raise through the IPO will help the Company to continue its new-build program and to expand its fleet into the Gulf Cooperation Council, the Mediterranean, and the Southern North Sea as well as into other new and attractive global markets, such as South East Asia and West Africa.” 

Mr. Christopher Foll, Chief Financial Officer of Gulf Capital, added: “GMS’s successful IPO reflects the impressive achievements of the Management team whom we have been delighted to support over the last seven years.  The funds raised in the course of the IPO and through the previous debt offerings allow them to move forward to the next phase of the Company’s development.”

Mr. Duncan Anderson, Chief Executive Officer of GMS, concluded: “Through this successful IPO, we have achieved our goal of listing our Company on an international exchange, raising enough funds to continue growing our fleet and securing a new share currency which allows us to consider accretive acquisitions.  The partnership with Gulf Capital, Horizon Energy and Al Ain Capital has been very beneficial for GMS and has allowed us to build together a global business in a very short timeframe.” 

Gulf Capital’s Control Growth Buy-Out Strategy
At the time of the acquisition of its 80% stake in GMS in 2007, Gulf Capital’s strategy was to partner with a new world-class Management team through a Management Buy-In program and to secure financing from its strategic banking partners to embark on an aggressive construction program and on a roll-out across the Middle East and beyond.  Gulf Capital secured over US$ 550 million in debt financing for GMS over the last seven years and launched an ambitious construction program, doubling the size of the fleet in the process.  GMS expanded rapidly across the Gulf and the Middle East to become the number one operator of SESVs in the region.  The Company subsequently expanded to the Southern North Sea where it is now involved both in the oil and gas and wind industries.  During Gulf Capital’s seven year ownership period, GMS increased its revenues by 640%, its EBITDA by 1003% and its Net Profits by 1117%, a strong testimony to the strong operational value addition by Gulf Capital and GMS’s Management team.  In March 2013, Gulf Capital secured a US$ 360 million loan facility which enabled the distribution of a significant dividend to all shareholders as well as the refinancing of existing debt and the financing of the construction of new Gusto barges.  Through the dividend distribution in 2013 and the IPO in 2014, Gulf Capital has secured total gross gains in excess of US$ 600 million including the Fund’s remaining shareholding in GMS, cementing this control buy-out as one of the most profitable transactions in the history of private equity in the Middle East.

GMS Business
Acquired by Gulf Capital in 2007, GMS was established in 1977 and headquartered in Abu Dhabi, UAE, and has grown from an Abu Dhabi centric company to one with operations across the UAE, Qatar, Saudi Arabia and the UK.  One of the major milestones the Management team reached was the successful completion and delivery of two new Gusto design vessels, Endurance and Endeavour, and now the Enterprise (referred to as “E” – Class barges), under construction. GMS’s sophisticated modern fleet of barges has positioned the Company as a class leader, with an average age of 9 years vs. a global offshore average age of 24 years. The fleet can now cater not only to the Oil & Gas industry, but also to the windfarm market. As such, they have enabled the Company to recently expand its presence in key markets, such as Saudi Arabia and the Southern North Sea.  GMS is focused on expanding in the UK and has established an office in Aberdeen in 2012 to pursue opportunities in the Southern North Sea, from where the Company derived 42% of its revenues in 2013. Since 2011, GMS successfully secured and executed more than 6 contracts with high caliber blue chip clients not only in the oil and gas sector, but also in the wind turbine installation market in the Southern North Sea.   The Company is also making a big push into Asia, having set up recently a legal entity in Singapore to act as a hub for the Company to expand into South East Asia. This would enable the potential for company fleet to enter the waters of Singapore, Malaysia, Indonesia, China and Brunei, to name a few potential markets. The Company today enjoys strong relationships with an impressive roster of international blue chip clients, which includes a number of national oil companies (NOCs), international Oil & Gas majors and broader oilfield services companies. With the capital raised from the IPO, the Company will continue to assess and build the most attractive vessels to operate in the Gulf and Northern Europe and to expand internationally.