Complex Made Simple

A look at 5 substantial IPOs Saudi companies plan in the near future

We all remember the 2019 Saudi Aramco IPO, and it looks like the deal is starting to spawn new IPOs

Riyad Capital to advise on the Elm share sale that could value the company at about $2 billion ACWA Power is expected to offer part of its shares in an initial public offering in 2021 Saudi Basic Industries Corp (SABIC) has selected HSBC and Morgan Stanley to work on a planned IPO

We all remember the 2019 Saudi Aramco IPO, and it looks like the deal is starting to spawn new IPOs.

AMEinfo has already reported on two Saudi IPO plans.

The first is Saudi food delivery firm Jahez which hired HSBC Holdings Plc’s local unit to help manage what could be the first listing by a tech startup in the kingdom. 

And the other is Saudi Tadawul, which has invited banks to pitch for roles in its highly-anticipated flotation.

With a market capitalization of $2.5 trillion, Tadawul is the Arab world’s largest stock exchange.

Here are 5 upcoming IPOs that will break news for their size and economic impact.

Digital security firm Elm

A digital security firm owned by Saudi Arabia’s Public Investment Fund (PIF) has hired Riyad Capital to advise on a possible IPO, Bloomberg reported. 

Digital security firm Elm has hired Riyad Capital to advise on the share sale that could value the company at about $2 billion, according to people familiar with the matter. 

The IPO could see the PIF selling off a stake of up to 30%, the people said, asking not to be identified as the information is private.

Elm is aiming to complete the sale of shares on the Saudi stock exchange by next year, Bloomberg said. 

State-controlled firms in Saudi Arabia are increasingly looking at ways to take advantage of soaring investor demand for new offerings while also raising money to help fund efforts to diversify the economy away from oil.

 ACWA Power

ACWA Power is expected to offer part of its shares in an IPO in 2021, according to Chairman Mohammad Abunayyan.

He said the offering will be limited to the Saudi market, adding the size of the offering hasn’t been determined yet.

The projects, completed or under construction, totaled $59 bn, comprising a portfolio of 57 assets, Abunayyan said, noting that the Kingdom dominates the largest portion of them.

According to data compiled by Argaam, the Public Investment Fund (PIF) raised its stake in ACWA Power from 33.36% to 50%.

Saudi Arabian Logistics Co.

Saudi Arabian Logistics Co. (SAL), spun off after more than seven decades as the cargo arm of the kingdom’s flagship airline, is working with HSBC Holdings Plc’s local unit on a potential share sale that could come as soon as this year.

No final decision has been made on the timing or size of an initial public offering but the listing would only be open to local and qualified investors, sources told Bolomberg. 

The Saudi unit of HSBC was hired late last year as a financial adviser to help SAL, as the company is known, explore its strategic options to raise funds.

SAL was launched as an independent entity at the end of 2019 and became operational shortly after, with responsibility for all ground handling and logistics services across the country’s airports.

Saudi Arabian Airlines Corp. owns 70% of SAL shares.

SABIC

Saudi Basic Industries Corp (SABIC) has selected HSBC and Morgan Stanley to work on the planned IPO of its specialty chemicals business, two sources familiar with the matter told Reuters.

SABIC, the world’s fourth-biggest petrochemicals firm, hired Saudi investment bank NCB Capital earlier this year to work on the public share sale, which sources said could raise several hundred million dollars.

The specialty chemicals business brings in about $2 billion in sales each year for SABIC, which is 70% owned by state oil giant Saudi Aramco, a stake it bought from the PIF. 

Arabian Drilling Co. 

Arabian Drilling Co., a Saudi oilfield-services company, is preparing an initial public offering (IPO) that could give it a valuation of around $2 billion, Bloomberg reported, citing sources familiar with the matter.

The firm, jointly owned by Saudi Arabia’s Industrialization & Energy Services Co. (TAQA) and Schlumberger, asked banks to pitch for a role on the potential share sale, the sources said.

Arabian Drilling may complete a deal on Tadawul before the end of the year, sources said, adding that no decisions have been finalized and the owners may decide against an IPO.

 Founded in 1964, Arabian Drilling is a limited liability company, with TAQA owning 51% of its shares and Schlumberger holding the remaining shares, according to data available with Argaam.The company owns and operates a fleet of 32 onshore and offshore drilling rigs, including equipment capable of drilling from 375 feet below sea level, and multi-purpose self-propelled service vessels to intervene and test wells.