Saudi Wealth Fund-Owned Digital Security Firm Hires IPO Adviser

(Bloomberg) --

A digital security firm owned by Saudi Arabia’s sovereign wealth fund has hired Riyad Capital to advise on a planned initial public offering that could value the company at about $2 billion, according to people familiar with the matter.

Elm is aiming to complete the sale of shares on the Saudi stock exchange by next year, the people said, asking not to be identified as the information is private. The IPO could see the kingdom’s Public Investment Fund selling off a stake of up to 30%, they said.

Deliberations are at an early stage, and details of the offering could change. Elm and the investment banking arm of Riyad Bank didn’t immediately respond to requests to comment.

The PIF, as the wealth fund is known, and other government-controlled firms are pushing ahead with plans to raise money through selling stakes in a raft of companies over the next year.

Two other PIF companies -- stock exchange Tadawul and Acwa Power -- are both expected to sell shares on the Saudi bourse this year, while Saudi Telecoms Co. and Saudi Basic Industries Corp. are planning to offer stakes in subsidiaries.

The pipeline of deals is a sign that state-controlled firms in Saudi Arabia are increasingly looking at ways to take advantage of soaring investor demand for new offerings while also raising money to help fund efforts to diversify the economy away from oil.

Crown Prince Mohammed Bin Salman said last month in an interview on Saudi TV that the PIF “shouldn’t hold on to assets.”

Saying “we should dispose of any mature asset,” he gave Elm as an example of a PIF-controlled firm that could sell shares in the future.

Elm traces its roots to a research company established in the 1980s. It developed several online services for the Saudi government including the Absher platform, which enables residents and citizens to carry out transactions such as traffic fine payments.

The Riyadh-based company also created a system for managing the entry of foreign pilgrims into the kingdom to visit Mecca and Medina, according to information on Elm’s website.

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