Saudi Arabia's United International Holding to offer 30% stake amid IPO boom

The company, a unit of electronics retailer Extra, will offer 7.5 million shares of its total capital in the public float

PWC says Saudi Arabia's Tadawul accounted for more than 61 per cent of total GCC IPO proceeds in the second quarter of this year. AFP

Saudi Arabia's United International Holding, the financial unit of retailer United Electronics, known as Extra, will proceed with its initial public offering amid momentum in the kingdom's stock market.

The company will offer 7.5 million shares, equivalent to 30 per cent of its issued share capital, and will be listed on the Saudi Exchange's main market, the Khobar-based company told The National on Sunday.

The shares will be offered to individual and institutional investors, with the final price to be determined after the book-building process and before the beginning of the subscription period for individual investors, it said.

Plans for a potential United International Holding public float were first announced in May last year, as part of the company's push to evaluate "strategic options”.

The company has obtained approvals from the Saudi stock exchange Tadawul, the biggest Arab bourse by market capaitalisation, and the regulator Capital Market Authority. HSBC Saudi Arabia is the IPO's financial adviser and lead manager, while EFG Hermes is the joint bookrunner and joint underwriter on the deal, the company said.

The decision of United International Holding, the parent company of Tasheel Finance, comes against the backdrop of a “promising market and focusing on untapped sectors with high growth potential”, as well as its brand reach and distribution network, it said.

“The consumer finance sector remains promising and untapped in the kingdom … the company has been able to target categories of customers who face challenges in accessing traditional financing options, including resident expatriates, SME employees and low-income customers, thus enabling the company to capture a high-growth market segment,” it said.

The Gulf region has hosted several large IPOs in the past few years, with its capital markets benefitting from high energy prices, business-friendly regulations and growing economies.

IPOs in Saudi Arabia, the Arab world's biggest economy, accounted for more than 61 per cent of total GCC IPO proceeds in the second quarter, data from PwC shows.

More companies are expected to tap into the Saudi IPO market. In April, the kingdom's low-cost airline, Flynas, confirmed plans to list its shares on the Tadawul stock exchange this year, amid the country's ambitions to grow its aviation sector.

IPO activity in the wider Middle East and North Africa region remained strong in the second quarter of this year, with 14 IPOs raising $2.64 billion. There were 13 IPOs in the same period last year, with proceeds rising by 45.3 per cent on a year-on-year basis, according to EY.