After Saudi IPO, Theeb Sees Long Slog to Pre-Pandemic Recovery

(Bloomberg) --

Saudi Arabia’s Theeb Rent-a-Car Co, which debuted on the Riyadh stock exchange this week, doesn’t expect to get back to its pre-pandemic revenue levels until 2022 at the earliest because of the coronavirus outbreak’s toll on businesses in the Middle East.

“By the end of this year we are targeting to generate 90% of 2019’s revenue,” Chief Executive Officer Naif Altheeb said Wednesday in an interview. “This will be supported by opening four new branches this year, which should start operating in the fourth quarter.”

Shareholders including Hamoud Abdullah Al-Theeb, Mohammed Abdullah Al-Theeb and an Investcorp fund raised 516 million riyals ($138 million) by selling a 30% stake in the company.

The Riyadh-based car rental firm priced its initial public offering at 40 riyals -- the top end of the range at which Theeb was marketing the stock -- making it the second company to be listed on the main Saudi equities market this year.

The CEO also said:

• Plans to distribute dividends every quarter, as warranted by market conditions
• Saudi Arabia’s increase in its value-added tax boosted the company’s sales, resulting in a 89% jump in June before the implementation of the VAT hike; sales have grown “steadily” afterward
• Energy prices had an “indirect, minimal” impact on sales
• No plans to open branches internationally in the near and long term

On Monday, the stock surged 30% on its trading debut and climbed 14% the following day. It closed down 5.4% on Wednesday after the company reported its net profit fell more than 45% last year.

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