Saudi Arabian Airlines to raise up to 2.54 billion riyals through the IPO of SAL Saudi Logistics Services Co

Saudi Arabia’s aviation sector is abuzz with activity as the country’s largest airline, Saudi Arabian Airlines Corp., commonly known as Saudia, and shareholder Tarabot Air Cargo Services Ltd., seek to raise up to 2.54 billion riyals ($678 million) through the initial public offering (IPO) of SAL Saudi Logistics Services Co., a prominent cargo firm. This development signifies the resurgence of Saudi Arabia’s listing market, signaling renewed investor interest, according to a Bloomberg report.

In a statement released on Monday, it was disclosed that Saudia and Tarabot are jointly offering 24 million shares, equivalent to a 30 percent stake, at a price range of 98 to 106 riyals per share, valuing SAL at a potential 8.48 billion riyals.

The bookbuilding phase for institutional investors is set to continue until October 1, while retail investors will have an opportunity to place orders from October 11 to October 13. Currently, Saudia holds a 70 percent ownership stake in SAL, with Tarabot holding the remaining 30 percent.

SAL’s IPO timing coincided with the establishment of Lumi Rental Co., a vehicle rental business, and the highly successful $1.2 billion IPO of ADES Holding Co., an oil driller backed by Saudi Arabia’s sovereign wealth fund, which garnered orders totaling $76.5 billion. This surge in activity in the Saudi Arabian listing market follows a relatively quiet first half of the year, partly due to a downturn in the nation’s stock market.

The recent rally in crude oil prices and a 10 percent increase in the Tadawul Index from its March low have contributed to renewed confidence in the Saudi Arabian listing market. Saudi Arabia’s ambitious plans to become a global supply chain hub and develop one of the world’s largest airports in Riyadh further fuel investor optimism.

SAL holds a dominant position in Saudi Arabia’s cargo handling sector, boasting a market share of approximately 95 percent. The company specializes in handling cargo, transit, and export shipments. In 2022, SAL reported revenue of 1.22 billion riyals ($325 million) and a net income of 362 million riyals. The company continued its strong performance in the first half of 2023, achieving a 15 percent year-on-year revenue growth.

HSBC Holdings Plc’s Saudi unit has been appointed as the sole financial advisor, bookrunner, global coordinator, lead manager, and underwriter for the IPO, underscoring the significance of this offering in Saudi Arabia’s evolving economic landscape.