Sidara pockets $1.435bn for 19pc stake in Worley trade as deal priced at $14.35/share

Worley’s major shareholder Sidara has pocketed $1.435bn for its stake in the engineering services firm.

Worley’s major shareholder Sidara has pocketed $1.435bn for its stake in the engineering services firm after shares offered by the group on Monday night priced at $14.35 each.

The Dubai based engineering firm had held 23.5 per cent and sold down 19 per cent in one hit after first bidding for the company in 2016 but being rejected.

Sidara, formerly Dar Group, had hoped that a relationship between the $8.5bn Worley and itself would lead to a stronger, longer term partnership, but Worley rejected its request for a global co-operation agreement because of the lack of synergies.

Not only had it not gained the boardroom influence it had hoped for, but the partnerships for work in the Middle East region.

The block trade was executed by Citi and Goldman Sachs and was well-supported by Australian and overseas institutional investors.

Bankers on the deal had been planning it for weeks, with investors around the market told a big equities deal was on its way, but were uncertain what the stock was until closer to the time.

But at the weekend, investors were sounded out by the banks, which managed to source $1bn of demand for the deal, and they pulled the trigger to execute.

Block trades can be a difficult and high pressure assignment for bankers where there’s a large amount of capital involved and enough demand to take the shares needs to be sourced.

Such transactions pay less fees than other more equity capital markets deals like capital raisings, but Wall Street outfits do the work to gain league table credits and as a relationship building exercise with clients.

In this case, the transaction was well-supported.

It also came on a day when one of the few initial public offerings in the market, Tasmea, closed up almost 9 per cent in what was a stellar result.

Yet, market participants warned about heightened optimism over the equity capital market being back open, as deals were only supported for quality offerings.

In the case of Worley, sources say that the attraction to the company’s shares, which had performed strongly in the past year, was exposure to the elevated oil price, from which the energy sector’s engineering clients benefit, and the market was positive about the outlook for services firms to the energy sector like Worley.

Capital spending by oil majors had held up better than expected and Worley was exposed to lucrative energy transition work, from which its clients were developing wind and solar projects.

Its acquisition of Jacobs Engineering Energy, Chemicals and Resources division in a $4.6bn deal in 2019 had also not proved to be troublesome as some may have feared.

On offer on Monday night were 100 million shares in Worley in an auction with the floor price at $14.25 ranging up to $15, where investors were invited to bid in 5c increments.

By 6pm AEST, the book was well covered at the floor price, and it closed at 7.30pm.

The final price represented a 12 per cent discount to Worley’s last closing pricing of $16.31 on April 29.

A term sheet sent to investors said that Samurai Investments, a wholly owned subsidiary of Dar Al-Handasar, was offloading the interest.

The Middle Eastern group bought into Worley with an initial 13.45 per cent stake in February 2017 after first making its approach as part of an attempt to buy the business and amass 19.9 per cent, but the $11.80 per share bid in November was rejected.

Shares were purchased at that time in 2017 at $10.35 after Worley’s shares closed at $8.07.

Its holding reached 26 per cent, but it was diluted after an equity raising to pay for the Jacobs assets.

Led by Chris Ashton, Worley reported a 22 per cent lift in revenue for the six months to December to $5.6bn, as its underlying net profit before tax and amortisation was up 30 per cent to $188m on the previous corresponding period.

Sidara describes itself as a global design, engineering and consulting group that supports some of the world’s biggest and most complex design and engineering projects, with $US2.8bn of revenue generated last year.