Riyadh

Saudi Arabia's aviation landscape is buzzing with activity as the nation's largest airline, Saudi Arabian Airlines Corp., commonly known as Saudia, and shareholder Tarabot Air Cargo Services Ltd., aim to raise up to 2.54 billion riyals ($678 million) through the initial public offering (IPO) of SAL Saudi Logistics Services Co., a prominent cargo firm. This development marks the revival of Saudi Arabia's listing market, signalling a renewed investor interest, according to a report by Bloomberg.

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As per a statement released on Monday, it was revealed that Saudia and Tarabot are jointly offering 24 million shares, equivalent to a 30 per cent stake, at a price range of 98 to 106 riyals per share, valuing SAL at a potential 8.48 billion riyals.

The bookbuilding phase for institutional investors is set to continue until October 1, while retail investors will have an opportunity to place orders from October 11 to October 13. Presently, Saudia holds a 70 per cent ownership stake in SAL, while Tarabot holds the remaining 30 per cent.

The timing of SAL's IPO coincided with the establishment of Lumi Rental Co., a vehicle rental business, and the hugely profitable $1.2 billion IPO of ADES Holding Co., an oil driller supported by Saudi Arabia's sovereign wealth fund, which generated orders totalling $76.5 billion. This increase in activity in the Saudi Arabian listing market comes after a comparatively quiet first half of the year, which was partly caused by a downturn in the nation's stock market.

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The recent rally in crude oil prices and a 10 per cent increase in the Tadawul Index from its March low have contributed to the renewed confidence in the Saudi Arabian listing market. Saudi Arabia's ambitious plans to become a global supply chain hub and develop one of the world's largest airports in Riyadh further fuel investor optimism.

SAL holds a dominant position in Saudi Arabia's cargo handling sector, boasting a market share of approximately 95 per cent. The company specialises in handling cargo, transit, and export shipments. In 2022, SAL reported revenue of 1.22 billion riyals ($325 million) and a net income of 362 million riyals. The company continued its strong performance in the first half of 2023, achieving a 15 per cent year-on-year revenue growth.

HSBC Holdings Plc's Saudi unit has been appointed as the sole financial advisor, bookrunner, global coordinator, lead manager, and underwriter for the IPO, underscoring the significance of this offering in Saudi Arabia's evolving economic landscape.

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(With inputs from Bloomberg)

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