Saudi Arabia’s SAL Logistics seeks to raise $678m from IPO

SAL Saudi Logistics Services Company (SAL) has started taking investor orders for its planned initial public offering (IPO), which is aimed at raising as much as $678m (SAR2.5bn), as listings in the kingdom gather steam after a slow start to the year.

SAL set the price range for the IPO on the Saudi Exchange (Tadawul) at SAR98 and SAR106 per share. The indicative price implies a market valuation of as much as SAR8.5bn.

The logistics firm’s shareholders – Saudi Arabian Airlines (Saudia) and Tarabot Air Cargo Services – are offering 24 million shares, equivalent to 30 per cent of the company’s paid-up capital post-listing.

Saudia currently owns 70 per cent of SAL while Tarabot holds a 30 per cent stake in the firm. Post-listing, Saudia and Tarabot will collectively own 70 per cent of the company’s share capital.

The company giant is offering the shares in two tranches — institutional investors and retail investors— between September 25 and October 13, with the final offer price expected to be announced after the book-building process.

SAL is the biggest cargo handling firm in Saudi Arabia, with a 95 per cent market share and provides transit and export shipments across 18 airports including the four international airports of Riyadh, Jeddah, Medina, and Dammam.

The logistics company reported revenues of SAR1.22bn ($325m) in 2022 and net income of SAR362m.

Its half-year revenue surged by 15 per cent year-on-year while its earnings before interest, taxes, depreciation, and amortisation (EBITDA) grew by 24.5 per cent YoY.

SAL has allotted capital expenditure (CAPEX) of more than SAR1.5bn to cater to the expected growth in cargo handling demand through 2030.

The company has already invested SAR600m with a further SAR906m to be invested over the medium-term.

The firm is well-positioned to capitalise on the growth of Saudi Arabia’s passenger ground services market, which is expected to grow at a CAGR of 11.3 per cent to 158 million passengers by 2030.

Saudi Arabia has outlined an ambition to become a global supply chain hub and is developing one of the largest airports in the world in Riyadh under Vision 2030.

HSBC Saudi Arabia is the sole financial advisor, bookrunner, global coordinator, lead manager and underwriter for the IPO.

SAL joins Saudi IPO frenzy

Meanwhile, Saudi Arabia is seeing a surge in IPOs after ADES Holding Company started taking investor orders for its Riyadh IPO on Sunday, with plans to raise as much as SAR4.6bn at a price range of SAR12.50 and SAR13.50 per share.

The company is selling 237.1 million new shares in the IPO while its shareholders, which include Public Investment Fund, ADES Investments Holding and Zamil Group Investment, are selling about 101.6 million shares. Saudi car rental firm Lumi Rental Company also priced its $290m offering at the top of the range.

The GCC raised a total of $5.3bn in proceeds through 21 offerings in the first half of 2023, marking a year-on-year decline in value by 61 per cent compared to $13.6bn a year ago, Kuwait Financial Centre (Markaz) said in its Initial Public Offerings (IPO) in the GCC markets report.

In the neighbouring UAE, there has been almost $4bn worth of listings, according to the data.

Earlier in September, Oman’s OQ Gas Networks, the pipelines business of state oil giant OQ, said it plans to list a 49 per cent stake on the Muscat Stock Exchange – in what is expected to be the biggest offering in the sultanate in almost two decades.

Read: GCC stock markets are hitting record highs. Here’s why