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Sport Clubs issues prospectus for Tadawul IPO: Fitness chain operator SportClubs is taking a 30% stake — good for 34.3 mn shares — to the main market Tadawul in a hybrid offering, according to its prospectus (pdf). Existing shares account for some 23.9 mn shares — representing 21% of post-IPO capital — while the remaining portion being newly issued shares. This comes nearly three months after the Riyadh-based firm secured approval from the Capital Market Authority (CMA) for the IPO.
Big money goes in first: The company will announce its IPO price range on Sunday, 22 June, according to its IPO webpage, which will kickstart the institutional subscription period, set to run between 22-26 June. Large-scale investors will be able to book 100% of the offered shares, with each investor allowed to buy between 100k and 5.7 mn shares.
Retail investors will have a 20% clawback to subscribe to on Tuesday, 8 July, provided there is sufficient retail interest. They can subscribe to a maximum of 250k shares each and a minimum of 10. Final allocations will take place no later than Thursday, 10 July.
Post-IPO structure: Selling parties — including Special Opp. Investment, Diamond Opp. Sports, and Elaf Al Khaleej Commercial Investment — will retain a 56% post-IPO majority, down from 80%. Their shares will remain on lockup for 6 months from the first day of trading.
Use of proceeds: Sport Clubs will use 60% of the net primary offering proceeds to set up and equip new fitness clubs. It will direct 20% of the fresh capital to buy equipment, 16% to develop its existing facilities, and 4% to settle outstanding debts. The offering will cost the issuer SAR 25 mn in expenses.
A snapshot of financial performance: The fitness company’s bottom line was up 10.6 % y-o-y at SAR 25.1 mn in 2023, while its top line grew 1% y-o-y to SAR 270.6 mn in the same year.
Risk factors: The company operates a network of 55 fitness-oriented real estate assets across the Kingdom, all leased from third-party landlords, exposing it to “to risks associated with the termination of lease agreements by lessors or the inability to renew them.” It also has 12 branches nationwide and a fully-owned subsidiary called Third Sports Amaken.
ADVISORS- BSF Capital is quarterbacking the transaction as lead manager, financial advisor, bookrunner, and underwriter. Kirkland & Ellis International is providing counsel. PwC is serving as financial due diligence advisor, Dr. Mohamed Al-Amri & Co. Chartered Accountants as auditor, and Portas Consulting MEA as market consultant.
Receiving agents include BSF Capital, Al Rajhi Capital, Albilad Investment, Riyad Capital, SNB Capital, ANB Capital, Derayah Financial, SAB Invest, and Alinma Investment, among others.
