Retail subscription to solutions by stc starts today

19/09/2021 Argaam

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


Retail investors start, today, Sept. 19, subscription to 2.4 million shares of Arabian Internet and Communications Services Co. (solutions by stc), at SAR 151 a share.

 

On June 28, the Capital Market Authority (CMA) approved the company's request to offer a 20% stake, or 24 million shares, in an initial public offering (IPO). It allocated 90% of the total offered shares to institutional investors, while the remaining 10% was allocated to retail subscribers.

 

Retail subscription will last three days, ending Tuesday, Sept. 21.

 

This is the fourth IPO on the Saudi Exchange (Tadawul) in 2021, following Alkhorayef Water & Power Technologies Co., Theeb Rent a Car Co. and Tanmiah Food Co.

 

The Saudi market saw three IPOs in 2020, namely Dr. Sulaiman Al Habib Medical Services Group in February, Amlak International for Real Estate Finance Co. in July, and BinDawood Holding in October.

 

Company Info

 

solutions by stc started its business more than 25 years ago. It provides integrated services and solutions in information technology (IT) and digital services in the Kingdom.

 

Currently, the company, which offers services in 35 Saudi cities, has more than 24,000 clients.

 

solutions by stc has a system of global alliances and partnerships covering the information and communications technology (ICT) sector, with more than 150 partners around the world in the fields of IT and digital services.

 

Below table details the services provided by the company:

 

Categories of Services

Services

Details

Core ICT Services

System Integration

The core business of solutions, with services spanning the value chain, enabled through a strong local and global partner ecosystem, offering network integration, infrastructure integration services and advisory services.

Communication and Internet

Entails dedicated, secured and high-quality business internet, satellite services and enterprise mobility management.

 

Outsourcing Services

Providing outsourcing services and solution support to customers, with IT, technical and administrative professionals skilled in ICT, customer care and shared services.

Managed Services

Providing end-to-end management of business network and infrastructure i.e., managed WiFi, managed LAN and managed router services with the capability to deliver customized managed services projects.

 

Cloud Services

Selling the full spectrum of data center and cloud services including co-location, private and public cloud, infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS), as well as cloud professional services.

Cyber Security

Services covering planning, design, implementation, and project management of a technical solution that addresses an enterprise's specific need for security.

Digital Services

Consisting of Internet of Things (IoT) and digital transformation services, providing digital solutions to connect monitor and analyze machines/ devices for informed and effective decisions.

 

The company's five-year strategy includes the following:

 

Securing a leading position in the field of managed and professional services: Demand in the IT sector is directed towards cloud computing services instead of establishing data systems centers.

 

Expanding the product portfolio: This is achieved through boosting focus on the existing and future products in new sectors, as well as developing digital and communication service packages, while focusing on small and medium-sized enterprises (SMEs).

 

Enhancing the breakthroughs achieved at the level of clients and alliances with global partners: Through paying attention to customer experience, governance, and service delivery.

 

Promoting efficiency and collaboration: Through building technical capacities, as well as managing resources and spending efficiency.

 

Market Share

 

The company owns a 13% market share in the Saudi IT services industry, which is deemed a fragmented market (except for connectivity, standalone software, and hardware) – more than double the size of the second largest IT services provider by market share.

 

Fragmented specialized players hold a market share of 48% in the IT sector, hitting SAR 19.8 billion in 2018.

 

Market Share of Key Players in IT sector in 2018

Category

Market Share

 

solutions by stc

13%

 

Telco Players

Less than 2%

 

Local System Integrators

23%

 

International Players

9%

 

 

The company’s business is currently concentrated in the Saudi market. The percentage of sales outside the Kingdom (in Kuwait and Bahrain) does not exceed 0.15% of the company’s total sales for the financial year ended Dec. 31, 2020. solutions by stc has five branches in Saudi Arabia.

 

According to the prospectus, solutions by stc plans to participate in growth solutions to target industry verticals and use cases with high potential (for example, financial services due to regulatory trend towards bringing data storage in-house).

 

The company aims to increase its market share in the Kingdom and achieve sustainable revenue growth while focusing on improving profitability to maximize shareholders’ returns.

 

solutions by stc holds the largest market share of 23% in the cybersecurity segment, followed by managed networks (17%), data center and cloud computing as well as office equipment (16% each).

 

The following table shows the company’s market share in various segments:

 

Market Share in 2018

Segment

Solutions by stc

Others

Cybersecurity

23%

77%

Managed Networks

17%

83%

Data Center and Cloud Computing

16%

84%

Equipment Services

16%

84%

Systems Integration

14%

86%

IoT

2%

98%

Application Services

--

100%

*The company and the market consultant derived this data from the market data related to the International Data Corp. (IDC) since 2018.

 

Company Profile

Company

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

Market

The Saudi Exchange (Tadawul)

Core Activities

IT services for business sector

Capital

SAR 1.200 bln

 

IPO Summary

Issue Percentage (%)

20%

Number of Shares Offered to Individual Invetors

2.4 mln, or 10% of the 24 million total offered shares

Issue Price

SAR 151 a share

Qualified Subscribers

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

- Individual investors

IPO Minimum Limit Individual Investors

10 shares

IPO Maximum Limit for Individual Investors

600,000 shares

Retail Offering Period (3 days)

Sept. 19 – Sept. 21

Final Allotment

Sept. 27, 2021

Surplus Refunds

Sept. 29, 2021

 

Additional Information

Financial Advisor, Lead Manager, Underwriter and Bookrunner

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

 

Company Shareholders

Shareholders

Before IPO

After IPO

Number of Shares

(mln)

Ownership%

Number of Shares

(mln)

Ownership%

stc*

116.40

97%

94.80

79%

Telecom Commercial Investment Co. (TCIC)

3.60

3%

--

--

Treasury shares

--

--

1.20

1%

Public

--

--

24.00

20%

Total

120

100%

120

100%

*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 Share Scheme. 

 

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