Lumi Rental Co., a prominent Saudi Arabian car rental service, made an impressive entrance into the stock market on Monday, witnessing a significant surge of 30% in its share price following a highly successful $290 million initial public offering (IPO). The company’s shares made their trading debut at 72.6 riyals per share, marking a substantial increase from the initial offer price of 66 riyals per share. The stock price eventually reached its maximum limit of 85.8 riyals per share.
Lumi Rental Co.’s IPO garnered immense interest, attracting over $27 billion in bids from both institutional and retail investors. As a result, the segment designated for funds was oversubscribed by an astonishing 95 times. This strong market debut is being hailed as a promising sign for other companies contemplating a public offering.
Just last week, ADES Holding Co., an oil drilling firm, priced its own $1.2 billion IPO at the upper end of the price range due to a flood of investor orders totaling $76.5 billion. On the same day as Lumi’s debut, SAL Saudi Logistics Services Co., a cargo company, initiated the process for its IPO valued at approximately $678 million.
The successful listings of Ades and Lumi Rental have contributed to Saudi Arabia’s total IPO proceeds for the year, boosting the figure to $2.41 billion. However, this total remains 46% lower than the previous year, according to data compiled by Bloomberg. The first five months of the year experienced a significant slowdown in share sales activity in the kingdom, attributed to a 28% decline in the benchmark Tadawul index. This drop was primarily linked to falling oil prices and concerns of a potential global economic downturn.
Nonetheless, recent production cuts by Saudi Arabia and Russia have tightened the oil market, propelling oil prices to a 10-month high of $94 per barrel. This resurgence has led to a 20% recovery in the Tadawul index from its low in March through late July, despite some recent setbacks.
The Saudi IPO market received a renewed boost early in the summer with the successful listings of two companies, Jamjoom Pharmaceuticals Factory Co., a generic drug manufacturer, and First Milling Co., a flour milling firm. Both entities experienced robust investor demand, and their shares continue to trade significantly above their offering prices. Specifically, Jamjoom Pharma’s shares have nearly doubled, while First Milling’s shares have risen by 20%.
