With financial recovery under way, parent Seera Group believes now is the right moment for an initial public offering for its auto rentals division.
Saudi Arabian auto rental firm Lumi has hired Saudi Fransi Capital and EFG Hermes to arrange the sale of 30 percent of its shares in a planned initial public offering (IPO), two sources told Reuters. The kingdom’s largest travel company Seera, which owns Lumi, won approval for the float from Saudi Arabia’s Capital Market Authority (CMA) last week. Companies that secure approval from the CMA have six months to launch their public share sale.
Riyadh-based Lumi Rental Company has appointed Saudi Fransi Capital as financial advisor and joint bookrunner on the transaction, said one of the sources, declining to be named as the matter is not public. EFG Hermes joins Saudi Fransi as joint bookrunner, the source said.
Lumi and Saudi Fransi Capital did not immediately respond to requests for comment when contacted by Reuters on Monday. EFG Hermes declined to comment.
Lumi has a fleet of more than 19,000 vehicles, according to its website, and its earnings before interest, taxes, depreciation, and amortization (EBITDA) rose by 53 percent last year to $46.36 million, according to Seera’s financial results.
Lumi announced last September that it had opened a showroom in Riyadh to sell its used vehicles to consumers. It said it planned to open car showrooms in Jeddah and Dammam in the coming months.
Saudi Arabia has been actively pressing international companies to base themselves in the kingdom while also building a tourism industry, which is expected to spur demand for auto rentals.
The country’s car rental market is forecast to surge to $2.6 billion by 2027 growing at a compound annual growth rate of 8.6 percent, Glasgow Research & Consulting said in a report in January.
The Middle East has been a bright spot for stock market listings in 2022 and so far this year, with flotations from Oman oil driller Abraj Energy and Abu Dhabi’s ADNOC Gas.
Companies from the Middle East raised $21.9 billion through IPOs in 2022, more than half the total for the wider Europe, Middle East and Africa region, Dealogic data shows.
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Photo credit: Lumi plans to open a showroom in Jeddah. Pictured is a car on the road in Saudi Arabia. Maazin Fyroze / Unsplash