SAL Saudi Logistics Services Company (SAL) has revealed its strategy to divest a 30% ownership stake via an initial public offering (IPO) on the Saudi Exchange (Tadawul). This decision aligns with the increasing pace of listings in the kingdom after a slow start to the year.
In a statement, SAL announced that its shareholders, Saudi Arabian Airlines (Saudia) and Tarabot Air Cargo Services, are making available 24 million shares in the logistics company. This represents a 30% stake in the company’s paid-up capital following the listing.
At present, Saudia holds a 70% ownership stake in SAL, while Tarabot retains a 30% interest in the company, according to Gulf Business. The company will make the shares available in two stages, one for institutional investors and another for retail investors, during the offering period spanning from September 25 to October 10. The book-building process will determine the final offer price.
SAL stands as the largest cargo handling company in Saudi Arabia, boasting a 95% market share, and it facilitates transit and export shipments across 18 airports, including the four international airports in Riyadh, Jeddah, Medina, and Dammam.
Strong Financial Performance in 2022 and H1 2023 for Logistics Firm
The logistics firm reported revenues of SAR 1.22B ($325M) in 2022, with a net income of SAR 362 million. During the first half of the year, its revenue surged by 15% compared to the previous year, and its earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 24.5% year-on-year.
SAL has allocated more than SAR 1.5B for capital expenditure (CAPEX) to accommodate the anticipated growth in cargo handling demand until 2030. The company has already invested SAR 600M and plans to invest an additional SAR 906M in the medium term.
The company is well-positioned to benefit from the growth in Saudi Arabia’s passenger ground services market, projected to grow at a CAGR of 11.3% to 158 million passengers by 2030.
Saudi Arabia is striving to become a global supply chain hub and is developing one of the world’s largest airports in Riyadh under Vision 2030.
HSBC Saudi Arabia Leads SAL’s IPO as Exclusive Financial Advisor
HSBC Saudi Arabia serves as the sole financial advisor, bookrunner, global coordinator, lead manager, and underwriter for the IPO.
In the midst of this, SAL’s IPO joins a flurry of initial public offerings (IPOs) in the GCC region. ADES Holding Company recently initiated investor orders for its Riyadh IPO, aiming to raise up to SAR 4.6 billion. Meanwhile, Lumi Rental Company, a Saudi car rental firm, priced its $290M offering at the upper end of the price range.
According to the Kuwait Financial Centre (Markaz), the GCC raised a total of $5.3B through 21 IPOs in the first half of 2023, marking a 61% decline in value compared to the previous year’s $13.6B. In the UAE, nearly $4B worth of listings have taken place.
Additionally, in September, Oman’s OQ Gas Networks, the pipelines business of state oil giant OQ, announced plans to list a 49% stake on the Muscat Stock Exchange, which is expected to be the sultanate’s largest offering in nearly two decades.