Quiver Quantitative - Saudi Arabia's SAL Saudi Logistics Services, a prominent cargo firm, has received a staggering $48.6 billion in orders for its initial public offering (IPO) valued at $678 million, positioning it as the kingdom’s second-largest IPO this year. The intense institutional investor interest — with bids for 72 times the shares available — underscores the rebounding appeal of the Saudi IPO market, which had witnessed a lull at the beginning of the year. The shares were priced at a premium, 106 riyals each, placing the company's valuation at 8.48 billion riyals. Through this IPO, Saudi Arabian Airlines and Tarabot Air Cargo are floating 24 million shares, equating to a 30% stake in SAL.
The scale of the interest in SAL's IPO follows in the footsteps of the $1.2 billion offering by oil driller ADES Holdings, which also attracted substantial investor attention. Since September, there's been a renaissance in listing activity, more than doubling the kingdom's IPO proceeds for the year, with the tally reaching $2.4 billion even before SAL's offering, as per Bloomberg's data compilation.
Earlier in the year, the tepid activity in Saudi Arabian offerings was influenced by the subdued oil prices. However, as oil prices began to rally by summer, listing momentum picked up. This boost notwithstanding, recent fluctuations in crude oil prices, influenced by worries about rising interest rates and global economic conditions, have instilled a sense of caution regarding the demand outlook.
Operating with a dominant 95% market share in cargo handling within Saudi Arabia, SAL is not just involved in domestic cargo operations but also manages transit and export shipments. Aligning with Saudi Arabia's broader economic strategy, SAL is poised to play a crucial role as the kingdom aspires to establish itself as a global supply chain nexus and intends to set up one of the world's most expansive airports.
This article was originally published on Quiver Quantitative