Saudi Arabia’s SAL Logistics gets $49bn in orders for IPO

Image courtesy: SAL/ Twitter

SAL Saudi Logistics Services Company (SAL) has attracted $48.6bn (SAR182.4bn) in orders for its $678m initial public offering (IPO) on the Saudi Exchange (Tadawul), as listings in the kingdom gather steam after a slow start to the year.

The cargo firm set the final offer price for the offering at SAR106 per share, implying a market capitalisation of SAR8.5bn at listing.

The company said the institutional book-building process generated an order book of SAR182.4bn, the demand level represents a subscription coverage of 72 times.

“We are honoured to have witnessed such strong demand for SAL’s shares by institutional investors securing the top end of the price range, reflecting their confidence in SAL’s equity story, particularly our business, financial performance, management team, and growth prospects,” said Faisal bin Saad Albedah, managing director & CEO of SAL.

Following the listing on Tadawul, the company is expected to have a free float of 30 per cent, representing 24 million of its total shares (80 million). The listing is set to be Saudi Arabia’s largest after the $1.2bn IPO of oil driller ADES Holding, which also drew strong demand from investors.

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.

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

SAL joins GCC IPO rush

Meanwhile, a resurgence in Saudi Arabia listings since September has more than doubled the country’s IPO haul for the year, which stood at $2.4bn before SAL, according to data compiled by Bloomberg.

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.

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