United International Holding Company (UIHC) is set to make waves in Saudi Arabia’s financial markets today as it initiates a SAR990 million ($264 million) initial public offering (IPO) on the Riyadh Stock Exchange, Tadawul.
United International’s Bold Move into the Public Market
United International Holding Company (UIHC), a prominent player in Saudi Arabia’s financial sector, is taking a significant step by offering 30% of its shares to the public. This IPO aims to raise up to SAR990 million ($264 million), marking one of the largest offerings in the kingdom this year. The company is selling 7.5 million shares, which represents a substantial portion of its total issued share capital.
UIHC, the parent company of Tasheel Finance and Procco, has strategically priced its shares between SAR120 and SAR132. This price range suggests a market capitalization between SAR3 billion and SAR3.3 billion, positioning UIHC as a major contender in the financial services arena.
Breakdown of the IPO Structure
The IPO is divided into two primary tranches targeting different investor groups. Institutional investors and retail investors have separate windows to subscribe to the shares between October 28 and November 4. The final offer price will be determined after the book-building process concludes, ensuring that the pricing reflects current market conditions and investor demand.
- Total Shares Offered: 7.5 million
- Stake Offered: 30% of total issued share capital
- Price Range: SAR120 – SAR132 per share
- Target Fundraising: SAR990 million ($264 million)
- Investment Window: October 28 – November 4
This phased approach allows both seasoned institutional investors and individual retail investors to participate, broadening the IPO’s appeal and ensuring a diverse investor base.
Strong Support from Cornerstone Investors
UIHC’s IPO has already attracted significant interest from cornerstone investors, signaling strong confidence in the company’s prospects. Three major investors have committed to subscribing for a total of 1.2 million shares at the IPO price, which accounts for approximately 15.6% of the total offering. These cornerstone investors include:
- Zamil Group Investment Company
- A.K. Al Muhaidib & Sons Company
- Tawuniya
Their participation not only boosts the IPO’s credibility but also underscores the strategic importance of UIHC within the Saudi financial landscape.
Leadership of Global Coordinators
To ensure a smooth and successful IPO process, UIHC has appointed HSBC Saudi Arabia and EFG Hermes’ local unit as joint global coordinators and bookrunners. Their expertise in managing large-scale IPOs will be instrumental in navigating the complexities of the public offering and maximizing investor interest.
Financial Health and Growth Prospects
Tasheel Finance, a subsidiary of UIHC, has shown impressive financial performance, posting a third-quarter profit of $15.7 million (SAR59 million), which is an 11% year-on-year growth. Since its inception in 2019, Tasheel has expanded its services, serving over 200,000 customers and partnering with more than 50 retailers and service providers by 2023.
Procco, another subsidiary, provides essential back-office services like data entry, file processing, and telemarketing, supporting Tasheel’s growth and operational efficiency.
Financial Highlights:
- Third-Quarter Profit: $15.7 million (SAR59 million)
- Year-on-Year Growth: 11%
- Customer Base: Over 200,000
- Retail Partnerships: More than 50
Market Context and Regional IPO Trends
UIHC’s IPO is part of a broader trend of private companies in the Middle East seeking public listings. This year alone, several firms have announced plans to go public, contributing to nearly $8 billion in total raised funds. Notable mentions include:
- Talabat: A leading food delivery service considering a UAE listing.
- Alpha Data: An IT services firm also eyeing the UAE market.
- Tabby: A buy-now-pay-later company planning to list in Riyadh.
Despite geopolitical tensions in the Middle East, the region’s IPO market remains robust, with the UAE accounting for about 30% of the total funds raised. This resilience highlights the attractiveness of the GCC markets for both local and international investors.
Regional IPO Highlights:
- Total Raised This Year: Nearly $8 billion
- UAE Contribution: Approximately 30%
- Major IPOs: Talabat, Alpha Data, Tabby
However, not all IPOs have been smooth sailing. For instance, Oman’s OQ Exploration & Production saw a disappointing debut on the Muscat Stock Exchange, struggling to attract investor interest despite a record $2 billion share sale.
Strategic Implications for United Electronics Company
The proceeds from UIHC’s IPO will be directed to United Electronics Company (eXtra), the selling shareholder. This strategic move is expected to bolster eXtra’s financial position, enabling further expansion and investment in new ventures. EXtra’s focus on providing quality electronics and enhancing customer experiences positions it well for continued growth in the competitive retail market.
Investor Sentiment and Future Outlook
Investors are cautiously optimistic about UIHC’s IPO, given the company’s strong financials and the backing of cornerstone investors. The involvement of reputable global coordinators like HSBC and EFG Hermes adds an additional layer of confidence. However, market conditions and broader economic factors will play a crucial role in determining the IPO’s success.
As UIHC steps into the public market, all eyes will be on how it leverages the raised capital to drive growth and enhance shareholder value. The financial community remains keen to see if UIHC can replicate the success of its subsidiaries and continue its upward trajectory in the competitive Saudi financial sector.
