Saudi Arabian Airlines Corporation, also known as Saudia, and Tarabot Air Cargo Services are selling a 30% stake in SAL Saudi Logistics Services Company in an initial public offering (IPO), which may raise up to 2.54 billion riyals ($678 million). The announcement was made on Monday, with the shareholders looking to sell 24 million shares, ranging from 98 riyals to 106 riyals each.
Saudia owns 70% of SAL while Tarabot holds the remaining 30%. The IPO's book-building period for institutional investors will run until Friday, and retail investors will be able to place orders from October 11 to October 13.
The implied market value of SAL at listing on the main market of the Saudi Exchange (Tadawul) will be between $2.09 billion and $2.26 billion depending on the final offer price. The company has four business segments that include cargo handling, logistics solutions, passenger handling, and fulfillment, covering 18 airports across the kingdom.
SAL's performance has been robust in recent years. In the first half of this year, it recorded an annual 15% increase and a 26.7% surge in revenue and net income respectively. Over the fiscal 2020-2022 period, SAL registered a revenue compound annual growth rate (CAGR) of 20%, and an Ebitda growth of 15% CAGR. Net income margins increased to 30% in fiscal 2022, up from 28% in 2020.
The IPO follows a trend of increased activity in the Middle East region. IPOs raised more than $23 billion in 2022, compared with $7.52 billion from 20 offerings in the previous year. This was the highest share for the Gulf region since 2019 when Saudi Aramco (TADAWUL: 2222 ) went public in a $29 billion offering, the world's largest.
The volume of IPOs on bourses in the Mena region climbed by 44% annually in the second quarter of this year amid robust economic growth, according to global consultancy EY. This growth was driven by Saudi Arabia and the UAE, the top regional economies. The number of listings rose to 13 during the three months to the end of June.
HSBC has been appointed as the 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.
Saudi Arabia has outlined an ambition to become a global supply chain hub and develop one of the largest airports in the world in Riyadh, as part of its plans to diversify the economy. SAL is leading this effort with a roughly 95% market share in cargo handling and also handles transit and export shipments. The company had a revenue of 1.22 billion riyals in 2022 and a net income of 362 million riyals.
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