SAL Saudi Logistics Services IPO: cargo company may raise as much as $678m

Shareholders in the cargo company Saudi Arabian Airlines and Tarabot Air Cargo Services are selling 24 million shares equivalent to a 30 per cent stake

In the first half of 2023, SAL recorded an annual 15 per cent increase and 26.7 per cent surge in revenue and net income respectively.

The main shareholders in SAL Saudi Logistics Services Company are selling a 30 per cent stake in the company as part of an initial public offering that may raise as much as 2.54 billion riyals ($678 million).

The selling shareholders Saudi Arabian Airlines Corporation, also referred to as Saudia, which owns 70 per cent of SAL, and Tarabot Air Cargo Services that has a 30 per cent stake, are selling 24 million shares at a range of 98 riyals to 106 riyals each in the cargo entity, according to a statement on Monday.

SAL's implied market value at listing on main market of the Saudi Exchange (Tadawul) will be between $2.09 billion and $2.26 billion depending on the final offer price.

The bookbuilding period for institutional investors is from September 25 until October 1, and for retail investors from October 11 to October 13.

Middle East IPOs raised more than $23 billion in 2022, compared with $7.52 billion from 20 offerings in the previous year.

That was the highest share for the Gulf region after 2019, when Saudi Aramco went public in a $29 billion offering, the world’s largest.

Earlier this month, Saudi Arabia's oil driller Ades Holding generated $76.5 billion in orders for its $1.2 billion IPO, the country’s biggest of the year.

Saudi Arabia, the Arab world's biggest economy, and the wider GCC region have registered a flurry of IPOs amid strong investor demand at a time when economies are rebounding at a quicker pace from the coronavirus-induced slowdown and liquidity has been shored up by high oil prices.

The volume of IPOs on bourses in the Mena region climbed by 44 per cent annually in the second quarter of this year amid robust economic growth, according to global consultancy EY.

Growth in Mena IPO deals was driven by Saudi Arabia and the UAE, the top regional economies, EY said in a report earlier this month.

The number of listings rose to 13 during the three-month period to the end of June, bucking the global slowdown in equity capital markets activity, it said.

Last year, Arabian Drilling Company, a Saudi Arabian oilfield services company, raised $712 million from the sale of a 30 per cent stake in an IPO amid strong interest from retail investors.

In December, Saudi Aramco Base Oil Company, better known as Luberef, began trading on the Tadawul exchange after it raised $1.32 billion in its IPO.

SAL has four business segments that include cargo handling, logistics solutions, passenger handling, and fulfilment, covering 18 airports across the kingdom.

The company handled 722,000 tonnes of cargo and has 95 per cent of the market share in Saudi Arabia.

Saudi Arabia's passenger ground services market, is expected to register a compound annual growth rate (CAGR) of 11.3 per cent, increasing to 158 million passengers in 2030 from 67 million passengers in 2022, SAL said, citing independent analysts and government projections.

In the first half of 2023, SAL recorded an annual 15 per cent increase and 26.7 per cent surge in revenue and net income respectively, according to a company statement.

Its earnings before interest, taxes, depreciation and amortisation grew at an annual 24.5 per cent.

Over the fiscal 2020-2022 period, SAL registered a revenue CAGR of 20 per cent, and an Ebitda growth of 15 per cent CAGR. Net income margins increased from to 30 per cent in the fiscal 2022 year, from 28 per cent in 2020.

HSBC has been appointed as sole financial adviser, bookrunner, global co-ordinator, lead manager and underwriter.

Saudi Awwal Bank, Riyad Bank, Saudi National Bank, Al Rajhi Bank and Arab National Bank have been appointed as receiving agents for the Individual Investor tranche.