United Carton first to trade in run of Tadawul floats: IFR
Shares in United Carton Industries saw mixed performance on their trading debut on Tuesday, the first in a batch of Tadawul deals nearing completion following a busy start to the second quarter.
Shares opened up 6% at SR53 and despite falling back from the open held above SR50 IPO pricing until selling in the final hour sent shares sharply down to close just below at SR49.25.
More than 17m shares changed hands, nearly 1.5 times the 12m secondary shares sold in the SR600m (US$160m) IPO. Al Rajhi Bank was sole bookrunner.
Saudi Arabia has seen liquidity put to the test with three main market deals taking advantage of the window between Eid al-Fitr at the end of March and Eid al-Adha in early June, a window made shorter by initial caution following US president Donald Trump's tariff announcements in April.
The SR4.1bn IPO of low-cost carrier Flynas opens for retail subscriptions on Wednesday having been nearly 100 times covered on the institutional leg. Final allocations and refunds are due before Tadawul trading ends on June 4 for Eid al-Adha. Trading resumes on June 11.
An extension has been applied to the SR1.8bn–SR1.88bn listing of Specialized Medical Company to allow investors to amend their orders following published changes to the company's financials, with retail subscription now running from June 15–16.
One deal still awaiting an intention to float is Ejada Systems, for which Capital Market Authority approval expires on June 23.
Under CMA rules, deals have to complete within six months of approval though extensions are possible, particularly if the company is able to at least launch within the approval window. Alternatively the company may have to seek approval at a later date.
While a narrow window opens between Eid al-Adha and summer, most bankers in the region are focusing on the IPO pipeline from September, with similar dynamics applying in neighbouring UAE.
Ali Khalpey, head of ECM at EFG Hermes, which is working on SMC alongside SNB Capital, predicted around eight post-summer IPOs in the UAE, Saudi Arabia and Kuwait with one deal potentially launching before summer.
'We see a reasonable path to getting deals done. It's been a good couple of weeks and there is a very strong pipeline we hope to convert,' he said. 'People have a lot of cash they have built up and are looking to deploy it. On SMC and Flynas, books were very well covered and appetite to participate was strong. Saudi local demand is back and in bull market mode while international demand is also very good.'
While the IPO pipeline remains more time constrained there is widespread enthusiasm among bankers and investors for a growing role for secondary and accelerated options, with bankers saying potential candidates could launch before summer.
Like others in the region, Khalpey also sees a growing presence for secondary offers with test cases such as Adnoc Gas showing investors are comfortable with formats such as accelerated bookbuilds.
'Secondaries are part of the deepening of the market,' said Khalpey. 'The challenge is finding more shareholders to sell. Most don't want to sell or don't have need of capital and a lot of businesses are already very capital generative.'
John Wilkinson, co-head of EMEA ECM origination at Goldman Sachs, said there is visibility on multiple accelerated offers in Saudi Arabia and the UAE this year with conversations happening regularly.
'It's taken a while for the market to come to terms with ABBs,' Wilkinson said. 'It's taken a while to understand why the issuer is selling and the associated messaging but there is growing comfort with the product from the buyside in the region with a number having proven attractive in generating returns for investors with pricing more in line with international practice. For private companies you can't tell someone they have to offer a meaningful discount at IPO and that's the only liquidity event they get. In particular for privately owned businesses it has a really important seeding and behavioural effect on the IPO market.'
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