The primary shareholders of SAL Saudi Logistics Services Company are divesting a 30 percent stake in the company as part of an initial public offering (IPO) that could generate up to 2.54 billion Saudi riyals ($678M).
The selling shareholders, Saudi Arabian Airlines Corporation (commonly known as Saudia), which holds a 70 percent stake in SAL, and Tarabot Air Cargo Services, with a 30 percent stake, plan to sell 24 million shares in the cargo entity. The share price is expected to fall in the range of 98 riyals to 106 riyals, according to a statement released on Monday.
Upon listing on the main market of the Saudi Exchange (Tadawul), SAL’s estimated market value will be in the range of $2.09B to $2.26B, depending on the final offer price.
Institutional investors have the opportunity to participate in the bookbuilding process from September 25 to October 1, while retail investors can do so from October 11 to October 13.
Middle East IPOs Surge to $23B in 2022, Gulf Ranks Second Globally
The Middle East saw IPOs raising over $23B in 2022, a substantial increase from $7.52B from 20 IPOs the previous year. This made the Gulf region the second-highest contributor to IPOs globally, after 2019 when Saudi Aramco had the world’s largest IPO, raising $29B.
Earlier this month, Ades Holding, an oil drilling company in Saudi Arabia, attracted $76.5B in orders for its $1.2B IPO, making it the country’s largest IPO of the year.
The GCC region has witnessed a surge in IPOs, driven by strong investor demand and robust economic growth, accelerated by higher oil prices, as economies rebound from the effects of the pandemic.
The Mena region witnessed a 44 percent year-on-year increase in the number of IPOs in the second quarter of this year, largely driven by Saudi Arabia and the UAE, according to WAM.
SAL is a diversified company with four key business segments: cargo handling, logistics solutions, passenger handling, and fulfilment, serving 18 airports across Saudi Arabia. It holds a significant 95 percent market share in Saudi Arabia’s cargo handling sector. The primary shareholders of SAL Saudi Logistics Services Company are divesting a 30 percent stake in the company as part of an initial public offering (IPO).
Strong Growth Forecast for Saudi Passenger Services Market
The company projects robust growth in Saudi Arabia’s passenger ground services market, with an expected CAGR of 11.3 percent, reaching 158 million passengers in 2030, up from 67 million in 2022, based on independent analysis and government forecasts.
SAL reported substantial growth in the first half of 2023, with an annual increase of 15 percent in revenue and a 26.7 percent surge in net income. Its earnings before interest, taxes, depreciation, and amortization (EBITDA) grew at an annual rate of 24.5 percent.
Over the fiscal period from 2020 to 2022, SAL achieved a revenue CAGR of 20 percent and an EBITDA growth rate of 15 percent. Net income margins increased from 28 percent in 2020 to 30 percent in the fiscal year 2022.
HSBC has been appointed as the exclusive financial adviser, bookrunner, global coordinator, lead manager, and underwriter for the IPO. Saudi Awwal Bank, Riyad Bank, Saudi National Bank, Al Rajhi Bank, and Arab National Bank have been designated as receiving agents for the Individual Investor tranche.
