(Bloomberg) — Saudi Telecom Co. plunged the most since March 2020 after the kingdom’s sovereign wealth fund sold part of its stake in the company at a discount.
Shares in STC fell as much as 6.2%, touching the lowest intraday level since November 2020 before paring gains to trade 4% lower at 1 p.m. in Riyadh. The offering had priced at the low end of the range and at a discount to STC’s closing price on Thursday despite being oversubscribed.
The timing of the secondary share sale was “suboptimal, towards year-end with liquidity drying up in the market, when books are being closed.” said Ziad Itani, an executive director in Arqaam Capital’s equity-research division in Dubai.
Countries across the Middle East are stepping up efforts to sell shares in private companies and boost liquidity on their stock markets, with Saudi Arabia, Abu Dhabi and Dubai at the forefront. The pipeline for IPOs in Saudi Arabia is “deeper than ever,” Khalid al Hussan, chief executive officer of Saudi Tadawul Group Holding Co., the country’s exchange operator, said in an interview with Bloomberg Television last week.
Tadawul made its own trading debut as recently as Wednesday, a deal that may have affected the Saudi Telecom offering, according to Itani.
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“We do not see the STC hiccup as an indication for weak appetite on the upcoming IPO flurry, but rather a technical one-off,” Itani said. The firm expects short-term weakness in the stock “but sees this correction as a buying opportunity.”
STC is the Middle East’s most profitable mobile-phone operator. Shares in the company are little changed this year, compared with the 26% gain on the benchmark index.
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