Saudi gym operator Leejam Sports to offer IPO next month

Leejam Sports to float about 30 per cent of the company's existing shares in an offering in August

Visitors look at stock price information displayed on a digital screen inside the Saudi Stock Exchange, also known as the Tadawul, in Riyadh, Saudi Arabia, on Tuesday, April 10, 2018. Foreign investors bought more Saudi stocks in March than ever before in anticipation of the kingdom’s upgrade to emerging-market status. Photographer: Abdulrahman Abdullah/Bloomberg
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Leejam Sports, a gym operator in Saudi Arabia, will sell 30 per cent of its existing shares in an initial public offering in August.

Leejam Sports, which owns and operates clubs under the Fitness Time brand, will offer 15.72 million shares during the subscription period from August 1 to 7, the company said in a prospectus on the Tadawul stock exchange. It did not reveal the offer price.

The company will offer shares to Saudi nationals, residents and institutional investors, it said. GCC nationals and institutional investors as well as qualified foreign investors will be allowed to trade in the shares.

In the first quarter of 2018, Saudi Arabia has led the Middle East’s IPO activity, in terms of value and volumes, with five deals raising $ 603.2 million (Dh2.2 billion), according to Ernst and Young. The recent upgrade of the kingdom to emerging market status by MSCI and FTSE is expected to pump billions of dollars in foreign investment into the region’s biggest stock exchange. IPO activity around the Middle East and North Africa region in the first three months of this year was relatively slow but is expected to pick up in the second and third quarter, the consultancy said in a report in April.

Leejam Sports will use the proceeds from the share sale to pay its selling shareholder, on a pro-rata basis, according to the number of shares they owned and the company will not take any of the funds from the IPO, it said.

The Saudi gym operator recorded net income of 174 million Saudi riyals last year down from 203m riyals the year before, according to the prospectus.

It highlighted the VAT, which Saudi Arabia imposed in January, hikes in electricity prices and government fees imposed on companies wishing to hire expats as some of the main operating risks in the market.

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Leejam Sports owns and operates Fitness Time, a network of 115 sports and fitness centers in the region, and employs more than 3000 staff.

Bahraini private-equity firm Investcorp Bank is a shareholder in Leejam Sports, with a 25 per cent stake that it acquired in 2013.

Samba Capital and Investment Management is the lead manager, underwriter and book runner for the IPO and is also the company’s financial adviser, according to the prospectus.