PIF completes pricing of USD 4 bn bond issuance

The Public Investment Fund’s (PIF) USD 4 bn bond issuance was nearly 4x oversubscribed, with an order book of approximately USD 16 bn, the sovereign wealth fund said in a statement yesterday. The issuance comes as part of the PIF’s EUR Medium-Term Note Program, with the proceeds set to be “utilized for general corporate purposes,” the statement reads.

The details: The two-tranche issuance consisted of one USD 2.4 bn (SAR 9 bn) tranche with a five-year tenor, and a USD 1.6 bn (SAR 6 bn) tranche with a 9.5-year maturity, according to the statement. The PIF is rated Aa3 by credit rating agency Moody’s with a stable outlook and A+ by Fitch Ratings, also with a stable outlook.

The PIF has been active in the debt market this year: The fund also completed a USD 7 bn murabaha credit facility earlier this month, backed by a syndicate of 20 unnamed international and regional financial institutions, as part of its “medium-term capital raising strategy.”

What they said: “Continued strong demand from international institutional investors is testament to PIF’s diversified investor base, robust medium-term capital raising strategy and strong credit profile. These factors allow uninterrupted access to the global capital markets and support PIF’s efforts in driving Saudi Arabia’s economic transformation,” PIF’s Ahmed Alrobayan said.

ADVISORS- BNP Paribas SA, Citigroup, Goldman Sachs, HSBC Holdings, JPMorgan Chase, and Standard Chartered managed the issuance.

The Saudi Telecom Company (STC) signed a SAR 32.6 bn (USD 8.7 bn) contract with an undisclosed public entity to set up, manage, and provide telecommunications infrastructure services, the company said in a disclosure to Tadawul.

What we know: The contract spans for 18 months for preparation and execution, followed by a 15-year operational period, according to the disclosure. STC expects to begin recognizing revenue from this project starting 4Q 2026. No further details were disclosed.

Big plans for the telecoms sector: The PIF and STC have been working to consolidate Telecoms Towers Company (Tawal) and Golden Lattice Investment (Glic) under a new entity that is going to own and manage a portfolio of around 30k towers across five countries in a bid to dominate the Kingdom’s telecom tower space. The new entity is projected to have annual revenues in the order of USD 1.3 bn, PIF said earlier.

Market reax: STC’s shares rose 2.2% at the end of yesterday’s trading day to SAR 43.2.

Sumou Real Estate Company, asset management firm Al Jazira Capital, and Sumou Global Investment will establish a real estate investment fund to acquire and develop lands in the Kingdom, with projects valued at upwards of SAR 2 bn, the company said in a disclosure to Tadawul.

The details: The fund will develop a 414.3k sqm plot in Riyadh where 800 residential units will be built. It will also take over plots spanning 48.2k sqm in Dammam and 8.9k sqm in Khobar from Sumou Real Estate to develop a SAR 2 bn project.

Who’s in charge? Sumou Real Estate will act as project developer and receive a development fee valued at 10% of the total development costs. It will also receive SAR 90.7 mn from the fund for the handover of land holdings in Dammam and Khobar. The payment’s largest share, at 78%, will be in the form of some 7 mn units in the fund, with a nominal value of SAR 70.5 mn. The remaining 22% will be in cash, comprising SAR 20.2 mn. Sumou’s stake in the fund will total 26.2%, the disclosure said.

Sumou has been active on the regional stage, inking an MoU last week with Egypt’s Hassan Allam Properties, Midar Investment and Urban Development to invest USD 2 bn in hospitality and leisure projects in Cairo. This comes on the heels of a JV set up with Hassan Allam last March to open up cross-border investments in Egypt and Saudi Arabia.

Al Ahsa-based Ratio — the brand operator of homegrown coffee chain Ratio — is taking a 25% stake to Nomu, it said in a prospectus (pdf). Some 5 mn shares will be up for grabs in a secondary offering limited to qualified institutional investors (QFIs).

Substantial shareholders are also selling down their positions to a 59.94% stake, down from 83.78%. They will not be able to execute any transaction on their shares for a period of 12 months from the first day of trading.

The IPO is primarily driven by the Derayah private equity (PE) fund divesting a large portion of its stake, likely to realize gains on its investment. As the largest selling shareholder, the fund is capitalizing on the market to exit its position, which is a common strategy for PE funds looking to monetize their holdings after a period of growth.

SOUND SMART- Typically, Nomu IPOs are structured to raise fresh capital that companies use to fund their working capital and drive business growth. Unlike this case, where the offering is largely a secondary sale, most Nomu listings involve primary share issuance to support future strategic initiatives.

Use of proceeds: Net proceeds from the sale will be disbursed to the selling shareholders, after deducting some SAR 2.6 mn to cover IPO-related expenses.

Timeline: A five-day subscription period will kick off on Sunday, 16 February, during which QFIs will be able to book up to 999.9k shares each, with the minimum limit set at 100 shares per investor. The final share allocation is slated for Tuesday, 25 February.

A snapshot of FY 2023 earnings: Ratio Specialty’s net income came in at SAR 12 mn in FY 2023, up from SAR 9.7 mn in 2022. The company’s revenue clocked in at SAR 43.4 mn over the same period, up from SAR 35.9 mn the previous year.

ADVISORS- Derayah Financial is quarterbacking the transaction as the lead manager, while Amwal Capital is acting as financial advisor with RSM and Moore providing legal counsel. Receiving agents include Alinma Investment, Al Rajhi Capital, SNB Capital, Saudi Fransi Capital, Riyad Capital, ANB Capital, Alistithmar Capital, Albilad Capital, AlJazira Capital, GIB Capital, Alkhabeer Capital, SAB Invest, Sahm Capital, and Yaqeen Financial.

About Ratio Speciality: The restaurant and coffeeshop operator was founded in 2014 in Al-Ahsa. It currently runs over 88 branches across 37 cities in the Kingdom, including prime locations in Riyadh, Jeddah, Makkah, and Madinah. In 2022, the company also launched Mornin, a local breakfast spot.

Local marble and porcelain supplier HKC Ceramics, better known as Hedab Al Khaleej, is selling a 10.67% stake on Tadawul’s parallel market Nomu, it said in a prospectus (pdf). Some 800k newly-issued shares will be up for grabs in a primary offering limited to qualified institutional investors (QFIs).

Funding growth and settling old bills: Net proceeds from the sale will be used to finance the expansion of production facilities to meet growing domestic and regional demand. The fresh funds will also be channeled towards investing in new technologies, expanding product lines and reducing existing liabilities.

What’s next? A five-day subscription period will kick off on Sunday, 16 February, during which QFIs will be able to book up to 375k shares each, with the minimum limit set at 10 shares per investor. The final share allocation is slated for Tuesday, 25 February.

Post-IPO ownership structure + lockup period: The company’s three substantial shareholders will see their ownership diluted to a combined 68.57% stake post-capital hike and IPO down from 76.76%. They will not be able to execute any transaction on their shares for a period of 12 months from the first day of trading.

A snapshot of FY 2023: Hedab Al Khaleej’s net income came in at SAR 27 mn in FY 2023, up from SAR 20.7 mn the previous year. Meanwhile, its sales revenue stood at SAR 499 mn over the same period, up from SAR 468.8 mn in 2022.

ADVISORS- Yaqeen Capital is quarterbacking the transaction as financial advisor and lead manager, while PKF Al Bassam & Co. serves as legal accountant. Receiving agents include Derayah Financial, Al Rajhi Capital, SNB Capital, Alinma Investment, Albilad Capital, ANB Capital, BSF Capital, Riyad Capital, SAB invest, AlJazira Capital, Alistithmar Capital, AlKhabeer Capital, GIB Capital, and Sahm Capital.

The council of ministers signed off on a national plan to combat marine pollution in emergencies as well as fresh regulations for purchasing and renting vehicles by government agencies, state news agency SPA reports.

Also approved at its weekly meeting yesterday:

• An MoU on energy cooperation with the Philippines;
• An MoU with Bahrain on sports;
• An MoU on cybersecurity with Djibouti;
• An MoU with Pakistani authorities for collaboration on SMEs;
• An MoU on intellectual property with Indonesia;
• Authorization to draft and sign MoU with Russia for cooperation on archives;
• Authorization to draft and sign an MoU with China on driving licenses;
• Authorization to draft a cooperation agreement with the Republic of North Macedonia.

Saudi, UAE and other GCC states are growing their renewable energy capacity through ongoing projects targeting electricity production for domestic use and freeing up more hydrocarbons for exports, the Financial Times reports.

The Kingdom plans to generate 50% of its electricity from renewables by 2030, requiring 130GW of new capacity to power 25 mn homes. The ambitious target would require Saudi policymakers to “ramp up their efforts quite substantially,” head of renewables at Rystad Wiik Vollset said. The renewables boom promises big dividends for the Kingdom, including cheap energy costs and ample solar resources, synergies with AI data centers, and strong export potential for competitively priced clean hydrogen, Vollset added.

Not an easy target: Integrating renewables into Saudi’s fossil fuel-based grid requires substantial upgrades and poses a significant challenge. Still, GCC states are known for quick project turnarounds which far exceed comparable Western timelines, Vollset added.

SPORTS-

#1- UK-based sports field manufacturer SIS Pitches will design the field for Aramco Stadium in Al Khobar as the Kingdom is gearing up to host the 2034 World Cup, Al Arabiya reports, citing a statement from the company.

The details: The company — which was behind the Kingdom Arena pitch in Riyadh — will be in charge of designing a hybrid grass pitch, two natural grass training pitches, and a ventilation system for the Aramco Stadium by the end of this month. Meanwhile, the project is scheduled to be implemented in 2026.

ICYMI- Aramco tapped Spanish tech and engineering company Ayesa in December to be the project management consultant for its Al Khobar stadium.

#2- Banan subsidiary set to build two Optimo gyms in Riyadh: Banan Real Estate Company ’s subsidiary Qimam Nashaz Real Estate Development Company landed a SAR 224 mn contract to develop two gyms for Armah Sports Company in Riyadh’s Al Wadi district under the Optimo brand, according to disclosures to Tadawul (here and here).

EDUCATION-

The Education Ministry launched the Mdares platform, a comprehensive AI-powered platform offering services to parents, investors, and schools, according to a statement from the ministry. The platform displays information about national and international schools in the Kingdom to help parents make informed decisions on school choices for their children. The platform also serves as a gateway to investors who are looking to tap the Saudi education sector. In addition, it offers marketing and operation management tools for schools.

HOSPITALITY-

New Sheraton hotel coming to Al Khobar: Marriot International partnered with Ashaad Company and Aleph Hospitality to launch Sheraton Al Khobar Al Hamra, Al Khobar’s first Sheraton brand, according to a press release from Aleph. The 580-key hotel will be located near the King Fahd Causeway, which connects Saudi Arabia to Bahrain, and is slated for opening in 2028.

MINING-

Mohammed Hadi Al Rasheed and Partners Company kicked off production at its high-silica mine in Riyadh, after securing a mining license from the Industry and Mineral Resources Ministry, according to a disclosure to Tadawul. The project’s impact on the company’s financial statements is expected to materialize during 1H 2025.

URBAN DEVELOPMENT-

The Sharqia Development Authority launched the urban data platform Sard which aims to support planning and sustainable development in the Eastern Province by providing unified geospatial and urban data, state news agency SPA reports. The platform consolidates data from over 50 governmental and development entities.

STARTUP WATCH-

Homegrown edtech startup UpLevel has secured an undisclosed pre-Seed funding round from a group of angel investors, according to a press release. No further details on the total raised, use of proceeds, name of investors, or on whether the contributions were debt or equity-based were disclosed.

About UpLevel: Founded in 2024 by Idris Alshayea (Linkedin) and Hamad AlLuhaidan , UpLevel helps companies boost employee performance by providing connections to professional coaches that can provide training programs, mentoring, and tailored career guidance.

Private equity stakes traded globally on the secondary market hit a record USD 162 bn last year, up 45% y-o-y, the Financial Times reports, citing a review by investment bank Jefferies. The trend comes as investors exit PE funds in response to a protracted dryspell in new big-ticket acquisitions leads, while fund managers themselves are increasingly offloading stakes to new funds.

By the numbers: Volumes represent a 20% increase compared to the previous peak in 2021, when the pandemic triggered a global sell-off. Private capital firms also recorded a 44% y-o-y increase in asset sales at USD 75 bn in 2024, often using continuation vehicles — selling assets within the same firm.

The rationale: The move to the secondary market comes as funds are struggling to exit investments via IPOs or other transactions that offer appealing valuations, limiting their access to liquidity needed to pay fund backers, the FT said. Higher interest rates and lower consumer spending also increased pressures on PE funds, as a record number of private equity-backed firms in the US filed for bankruptcy last year, a study by S&P showed.

Trump era may alleviate some pressure: Antitrust regulations in the US and Europe in recent years have also limited M&A activity and made exits even harder. However, economists are predicting that President Trump’s second tenure promises a more business friendly regulatory environment.

Anticipation of Trump’s pro-business policies led investors to sell stakes at a smaller discount, 6% below net asset value, compared to 9% the year before, signalling confidence in an upcoming recovery of M&A activity that will facilitate exits, the FT reported.

MARKETS THIS MORNING-

It’s a calm morning as most Asian markets are closed for the Lunar New Year holiday, except for Japan’s Nikkei, up 0.6%. Meanwhile, Wall Street futures are unchanged as investors anticipate the Fed’s decisions on interest rates.

THE CLOSING BELL: TADAWUL-

The TASI rose 0.4% yesterday on turnover of SAR 9 bn. The index is up 3.2% YTD.

In the green: Jabal Omar (+7.5%), Almoosa (+6.9%) and Thimar (+6.5%).

In the red: Dar Alarkan (-5.4%), East Pipes (-5.4%) and Bawan (-4.1%).

THE CLOSING BELL: NOMU-

The NomuC was unchanged yesterday on turnover of SAR 36 mn. The index is down 1.4% YTD.

In the green: Mulkia (+7.8%), Sure (+7.8%) and Leen Alkhair (+7.2%).

In the red: Quara (-5.9%), Nbm (-4.1%) and Tharwah (-4.1%).

Saudi Foreign Minister Faisal bin Farhan met with his Turkish counterpart Hakan Fidan in Riyadh yesterday to discuss boosting bilateral ties and trade, as well as address regional and international developments, according to state news agency SPA.

ICYMI- Turkey is reportedly gunning for potential USD 6 bn defense sales to the Kingdom, including warships, tanks, and missiles. The agreement, which could be finalized during President Erdogan’s March visit, may involve Saudi Arabia joining Turkey’s KAAN fighter jet program and purchasing Altay tanks and missile-defense systems.