In a significant move for Saudi Arabia’s burgeoning logistics sector, SAL Saudi Logistics Services, backed by Saudi Arabian Airlines and Tarabot Air Cargo Services, raised $678 million in its Riyadh trading debut. This marks the second-largest initial public offering (IPO) in the kingdom this year, following closely behind ADES Holding Co.’s $1.2 billion offering.
The firm’s shares surged by 30% on opening day, starting at 116.6 riyals per share from an offer price of 106 riyals. The IPO attracted a staggering $48.6 billion in orders, with investors’ bids outstripping available shares by 72 times. This reflects a strong demand amidst Saudi Arabia’s ongoing efforts to establish itself as a global supply chain hub and diversify its economy away from oil.
Despite a dip in the benchmark index due to falling oil prices, SAL’s IPO has pushed Saudi Arabia’s total IPO proceeds over the $3 billion mark for the year. The kingdom’s largest listings market is demonstrating resilience in the face of fluctuating oil prices.
SAL holds a commanding 95% market share in cargo handling and reported robust financials with a revenue of $325 million and a year-over-year growth of 15% in the first half of this year. As part of the IPO, the company sold 24 million shares, representing a 30% stake. HSBC Holdings Plc (LON:)’s Saudi unit managed the offering.
This successful IPO aligns with Saudi Arabia’s broader strategy to overhaul its aviation industry, which is expected to attract $100 billion investment by the end of this decade. The strong performance of SAL’s IPO underlines investor confidence in this strategic direction and sets a positive tone for future listings within the sector.
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