solutions by stc issues prospectus for planned IPO

29/08/2021 Argaam

Logo of Arabian Internet and Communications Services Co. (solutions by stc)


Arabian Internet and Communications Services Co. (solutions by stc) announced today, Aug. 29, issuing the prospectus for its planned initial public offering (IPO) on the Saudi Exchange (Tadawul).

 

solutions by stc plans to float 20% of its share capital (or 24 million ordinary shares) in an IPO on the Saudi market. 

  

The Capital Market Authority (CMA) approved, on June 28, the company's request to float a 20% stake. 

 

The subscription targets two tranches: 

  

Participating parties: This tranche comprises the parties entitled to participate in the book building process as specified under the book building instructions. The number of shares that will be allocated initially is 24 million, representing 100% of the total shares offered for subscription. Final allocation will be made after the end of the subscription period for individual investors. Lead managers will have the right to reduce the number of shares allocated to participating parties to a minimum of 21.6 million, representing 90% of the total offered shares. 

  

Individual investors This tranche comprises Saudi Arabian natural persons, in addition to any non-Saudi natural person who is resident in the Kingdom or any GCC natural persons, provided they have a bank account with one of the receiving entities and are allowed to open an investment account. The number of shares offered for individual investors amounts to 2.40 million maximum, or 10% of total offered shares. 

 

The price range will be set through the book building that will start on Sept. 5. All tranches are allowed to participate in the process. After completing the book building, lead managers will announce the coverage ratio.   

 

Lead managers and the company have the right to set the offer price, based on supply and demand, provided that it does not exceed the price set in the underwriting agreement.  

 

Company Profile

Company

Arabian Internet and Communications Services Co. (solutions by stc)

Market

The Saudi Exchange (Tadawul)

Core Activities

Information technology services for business sector

Capital

SAR 1.200 bln

 

IPO Summary

Issue percentage (%)

20%

Number of shares offered

24 mln

Qualified subscribers

- Participating categories that include investment funds, qualified foreign investors (QFIs), and GCC legal persons.

- Individual investors

IPO minimum limit individuals

10 shares

IPO minimum limit for institutional investors

50,000 shares

IPO maximum limit for retail investors

60,000 shares

IPO maximum limit for institutional investors

5,999,999 shares

Periods of registering requests and book building  

September 05 – September 13

Retail offering period (3 days)

September 19 – September 21

Final allotment

September 27, 2021

Surplus refunds

September 29, 2021

 

Company Shareholders

Shareholders

Before IPO

After IPO

Number of shares

(mln)

Ownership%

Number of shares

(mln)

Ownership%

stc*

116.40

97 %

94.80

79 %

Total

116.40

97%

94.80

79%

*stc owns a 97% stake directly in the company and 100% indirectly through its subsidiary, Telecom Commercial Investment Co. that owns 3% of solutions by stc before the IPO. After the subscription, stc will sell 1.20 million shares, based on the final offer price to the company, to be utilized in its employee option program. 

 

Additional Information

Financial advisor, lead manager, underwriter and book runner

HSBC Saudi Arabia

SNB Capital

Morgan Stanley Saudi Arabia

Lead Manager

HSBC Saudi Arabia

Receiving banks

Saudi British Bank (SABB)

Saudi National Bank (SNB)

Al Rajhi Bank

Riyad Bank

Alinma Bank

Bank Albilad

 

Financial Results for H1 2021

 

solutions by stc posted SAR 461.3 million net profit for H1 2021, an increase of 19% year-on-year (YoY) from SAR 388.1 million

 

Financial Results (SAR mln)

Period

H1 2020

H1 2021

Variation%

Revenue

3199.0

3804.0

+ 19%

Gross profit margin

21.0%

21.6%

+ 0.6%

Net profit

388.1

461.3

+ 19%

Number of shares (mln)

120.0

120.0

--

EPS (SAR)

3.23

3.84

+ 19%

 

The profit growth was driven mainly by the rise in revenue by more than 19% YoY, following the collective rise in operating segments.

 

Revenue by Segment (SAR mln)

Period

H1 2020

H1 2021

Variation

Systems integration

1163.8

1185.3

+ 2%

Telecommunications and Internet services

613.7

843.4

+ 36%

Outsourcing services

565.8

683.2

+ 21%

Cloud services

292.2

469.9

+ 61%

Managed services

188.5

264.9

+ 41%

Cyber security

239.3

216.1

(10%)

Digital services

135.8

141.0

+ 4%

 

The table below illustrates the company's sales and net profit since 2017.

 

Income Statement (SAR mln)

Period

2017

2018

2019

2020

Sales

2962.3

4041.3

5257.3

6891.4

Net profit

549.9

556.5

393.8

701.8

Number of shares (mln)

120.0

120.0

120.0

120.0

EPS (SAR)

4.58

4.64

3.28

5.85

 

The table below illustrates key items of the company's balance sheet since 2017.

 

Balance Sheet (SAR mln)

Period

2017

2018

2019

2020

June 2021

Cash and cash equivalents

595.8

892.4

414.3

993.5

888.4

Current assets

3432.1

4261.2

4523.3

5571.0

5324.5

Non-current assets

75.9

188.8

354.1

763.6

782.5

Total assets

3508.0

4450.0

4877.4

6334.6

6107.0

Current liabilities

2017.6

2658.9

3377.3

4068.1

3777.6

Non-current liabilities

92.3

125.8

243.3

342.9

264.4

Total liabilities

2109.9

2784.7

3620.6

4411.1

4042.0

Capital

100.0

100.0

100.0

1200.0

1200.0

Shareholders’ equity

1398.1

1665.4

1256.8

1923.6

2065.0

 

 

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