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Saudi Airlines Unit Said to Seek as Much as $800 Million in IPO

A Saudi Arabian Airlines Aircraft Waits at JFK Airport
A Saudi Arabian Airlines aircraft waits at the gate at JFK airport in New York. Photographer: Bruce Bennett/Getty Images

Saudi Ground Services, a unit of Saudi Arabian Airlines, plans to raise $600 million to $800 million through the sale of a 30 percent stake in an initial public offering, three people with knowledge of the matter said.

The IPO of the business, formed in 2011 through a combination of the kingdom’s three main ground-service providers, will probably take place in the fourth quarter, the people said, asking not to be identified as the plans aren’t public. HSBC Holdings is advising Saudi Ground Services on the sale, according to the people.

IPO activity in Saudi Arabia, home to the Gulf region’s largest stock market, is quickening as markets rebound and valuations improve. The kingdom is also selling a 15 percent stake in National Commercial Bank, the country’s biggest lender by assets, Chairman Mansoor Al Maiman said last month.

The kingdom decided in 2006 to privatize six units of its national carrier. Saudi Airlines Catering, the first such business to be sold publicly, raised $347 million after the sale of a 30-percent stake in 2012.

The services unit, which provides ticketing, cargo loading and other passenger services for the airline, had net income of 400 million ($107 million) to 500 million riyals in 2013, two of the people said. It doesn’t disclose financial statements publicly.

Paul Harris, a spokesman for HSBC in Dubai, declined to comment. Spokesmen for Saudi Ground Services and Saudi Airlines didn’t return calls seeking comment.

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