Saudi Manpower Solutions (Smasco) plans to take a 30% stake to market through a secondary share sale of 120 mn shares on the main market Tadawul, according to the company’s prospectus (pdf). The recruitment company is yet to set a price range for the IPO.

The details: Institutional investors will provisionally be able to subscribe to 100% of the offering’s shares, while the financial advisor has the right to allocate 10% of the offering to retail investors “if there is sufficient demand.” Each institutional investor can subscribe to up to 20 mn shares and a minimum of 100k shares, while each individual investor can subscribe to a maximum of 2 mn and a minimum of 10 shares.

Use of proceeds: The Riyadh-based company’s selling shareholders will take the transaction’s proceeds home after covering transaction-related expenses — estimated at SAR 45 mn. All the proceeds will be divided between the selling shareholders on a pro rata basis.

Meet Smasco: The company provides recruitment solutions covering the full hiring cycle from contracting to facilitating the issuance of residency, driving license and medical and social ins. documents. The Riyadh-based company also helps businesses and the public sector hire on short-term contracts for seasonal jobs through a service it calls “mawsemiah.”

The investment case: Smasco is asset light, has digitized its operations, and runs with no debt. It is a “first-mover in the industry,” the prospectus claims, “ introducing on-demand hourly services, advanced mobile applications, dynamic pricing models, specialised services and strategic licensing and branding initiatives.” It serves both corporate and individual demand and is positioned to grow as the government looks to create the conditions for 2 mn new jobs through 2030.

By the numbers: Smasco’s top line was largely unchanged in 9M 2023 compared to the same year last year and its profit from ongoing operations declined 30% to SAR 121 mn, the prospectus says, citing reviewed (not audited) financial statements. Argaam separately reports that Smasco’s net income rose 10.7% y-o-y to SAR 166.3 mn in 2023, while its revenues dipped 0.7% y-o-y to SAR 1.8 mn,.

Smasco has five subsidiaries including tech-focused VC Saneem Investment Company, Saudi Logistics Services Company, Terhab Customer Experience, Romoz Development For Communications and Information Technology, and it is a 100% indirect shareholder in the Business Solutions Center. The company’s website says it has facilitated the recruitment of 160k workers at 4k entities across the Kingdom.

Shareholding structure: Majority shareholder Al Holoul Al Mutakamela Holding will hold a 47.8% stake in the company after the offering, down from 70%, Rafid Advanced Investments Company’s shareholding will inch down to 4.8% (from 7.5% before the offering), while Mohammed Abdulaziz All Habib and Sons Holding Company and Al Masa Real Estate Company will each holding 3.5% (down from 5.0% each) after the offering. The selling shareholders will not be able to execute any transactions on their shares for a period of six months starting from the first trading day.

The timeline:

  • Institutional investors will be able to place their orders starting on Wednesday, 8 May, until Tuesday, 14 May;
  • The two-day retail subscription process is slated to start on Sunday, 26 May;
  • Final allocation of the offering’s shares will take place on Monday, 3 June;
  • Any excess subscription fees will be refunded by Monday, 10 June.

ADVISORS- SNB Capital is quarterbacking the transaction as the sole lead manager, financial advisor, bookrunner, and underwriter. STAT Law Firm is legal advisor, Ernst & Young Professional Services is the financial due diligence advisor, and Arthur D. Little Saudi Arabia is acting as market consultant. The receiving agents are SNB, SNB Capital and Al Rajhi Bank.

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