NUPCO IPO: All Details About the Initial Offering in Saudi Market

NUPCO (the National Unified Procurement Company) was established in 2009 as part of the Saudi Ministry of Health's efforts to develop the healthcare system and enhance government spending efficiency. The company acts as the primary buyer of medicines and medical supplies for government health facilities, granting it a quasi-monopolistic capacity in managing medical supply chains across the Kingdom. By consolidating orders and tenders, NUPCO helps reduce costs and improve supply terms, while also supporting the localization of healthcare industries and enhancing transparency. Under Vision 2030, NUPCO has been identified as one of the government entities eligible for privatization, with the government preparing it for an initial public offering (IPO), expecting to sell 30% of its shares while the Public Investment Fund (PIF) retains the majority stake. This pivotal role makes the NUPCO IPO a significant economic event, especially as the state aims to list strategic companies in the financial market to stimulate growth and investment.

In recent years, NUPCO has undergone a series of administrative and financial restructuring procedures to comply with the requirements for listing on the Saudi financial market. These steps included updating governance, preparing financial reports according to international standards, and developing electronic systems for supply chain management. In 2024, a group of local and international investment banks was appointed as financial advisors and book managers for the IPO, including AlAhli Capital, Morgan Stanley, and J.P. Morgan. This appointment reflects the seriousness of the Saudi authorities in moving forward with the offering process and ensuring the attraction of the largest segment of local and international investors. NUPCO has also worked with the Capital Market Authority to prepare the prospectus and all required regulatory documents. It is worth noting that this type of IPO requires high coordination between the company, regulatory authorities, and financial advisors to ensure transparency and protect the rights of all parties.

According to reports and preliminary data circulating in the second half of 2024, the value of the offering (30% of NUPCO's capital) is estimated to reach approximately 12 – 15 billion Saudi Riyals. This means that the total valuation of the company could range between 40 – 50 billion Riyals, making it one of the largest companies in the healthcare sector in the region. Although no official financial data has been published yet, NUPCO's substantial business volume and high annual revenues (as it is the main supply partner for the Ministry of Health) give it a unique weight among companies eligible for listing. The final share price range is typically determined during the order book building period in collaboration with financial advisors and based on institutional investor demand. It should be noted that these estimates are subject to change depending on market conditions at the time of the offering and investor interest.

To illustrate the differences and provide an approximate view of the expected financial indicators for a listed company, we review the example of Hail Cement Company (symbol: 3001) listed on the Saudi financial market. The share price at the end of 2024 was approximately 80 – 85 Riyals, while the market capitalization reached around 14 – 16 billion Riyals. The price-to-earnings ratio was between 10 – 12 times, with an annual distribution rate ranging from 3 – 4%. Despite the difference in sectors (cement manufacturing versus healthcare), these figures reflect a pattern of stability and consistency in the profits of large listed companies. For NUPCO, it is expected to achieve lower or higher earnings multiples depending on its classification as a growth or stability company, but it is likely to follow a moderate dividend distribution policy in the early years post-listing, with the potential for increased distributions as annual profits strengthen. For more about Hail Cement, you can visit the stock page.

The healthcare sector in Saudi Arabia is characterized by rapid growth driven by increased government spending and trends towards localizing medical industry. NUPCO occupies a unique position as a unified buyer of medicines and health supplies for the government, granting it an operational quasi-monopoly in this field. There are no listed companies that directly compete with it in its core activity, as competition is concentrated in pharmaceutical manufacturing companies (such as Spimaco and Tabuk Pharma) or private distribution companies that primarily serve the private sector. Internationally, NUPCO can be compared to giant distribution companies like Cardinal Health and McKesson, despite differences in business models and government support. The growth of the Saudi healthcare sector is expected to continue at high rates, enhancing NUPCO's opportunities for sustainable growth post-listing. Additionally, the shift towards digital transformation and advanced supply chains increases the company's efficiency and ability to meet rising demand.

The NUPCO IPO is subject to all regulatory requirements imposed by the Saudi Capital Market Authority (CMA) and Tadawul. Among these procedures are the preparation of a detailed prospectus that includes financial data, an explanation of the business model, governance policies, key risks, and the company's future plans. The company must also appoint an independent financial advisor, legal auditors, and certified accountants to ensure the accuracy and transparency of the information provided to investors. The subscription is typically opened in two phases: first for institutions and then for individuals. The share price range is determined after studying the demand from institutional investors during the order book building period. Investors should carefully read the prospectus and understand the risks before making any decision regarding participation in the offering.

The year 2024 has seen rapid steps in preparing for the NUPCO IPO, most notably the appointment of AlAhli Capital, Morgan Stanley, and J.P. Morgan as key financial advisors to manage the offering. This partnership with local and international financial expertise enhances the chances of a successful offering and attracting local and international investors. Regarding the timeline, local sources reported that the announcement of the offering date was expected in the second half of 2024, with a possibility of postponement to early 2025 due to market conditions or additional regulatory requirements. During this period, NUPCO has been working to enhance its infrastructure, build new warehouses, and expand partnerships with local pharmaceutical companies, positively reflecting on its market position and increasing potential investor confidence.

Among the most significant attractions of the NUPCO IPO is its exclusive position as a major government supplier and the steady demand from the government healthcare sector, which reduces revenue volatility and enhances financial stability. Additionally, the state's direction towards privatizing major companies under Vision 2030 opens the door for additional growth opportunities and improved governance. Conversely, there are some risks that investors should be aware of, including the possibility of changes in government procurement policies or restructuring of the healthcare sector in the future, as well as logistical expansion risks and controlling operational costs. The final offering price also depends on market conditions at the time of the IPO and the level of investor interest. It is always essential to conduct thorough analysis and read the official prospectus before making any investment decision.

Typically, major companies listed in the Saudi market allow individual and institutional investors to subscribe to the public offering through multiple channels: local banks, electronic trading platforms, or directly via the company's website or the offering manager. In the case of NUPCO, a centralized electronic subscription form is expected to be provided, in addition to the possibility of subscribing through the branches of participating banks. The subscription period for institutions starts first, followed by opening it for individuals, and the subscription period usually lasts between 5 to 10 working days. After the period ends, the final allocation of shares is based on demand size, and excess funds are refunded to subscribers who did not receive the full amount requested. It is essential to follow the announcements from the Capital Market Authority and NUPCO's official website to know the deadlines and detailed procedures.

The listing of NUPCO in the Saudi financial market represents a strategic step within efforts to diversify the economy and attract foreign and local investments to the healthcare sector. The offering is expected to positively reflect on market liquidity and enhance the position of Tadawul as a primary destination for initial public offerings in the region. Additionally, the IPO serves as a model for privatizing major government companies, especially in vital sectors. At the sectoral level, NUPCO's listing may drive other companies in the healthcare sector to improve governance and develop services to meet advanced regulatory requirements. For investors, the offering adds a new option for diversifying investment portfolios in a rapidly growing sector, with the potential for local companies to benefit from collaboration with NUPCO in localization projects and strategic partnerships.

Despite the absence of published financial data for NUPCO so far, one can refer to the indicators of listed companies like Hail Cement (symbol: 3001) to gain insight into the expected performance of major companies. The share price of Hail Cement at the end of 2024 was approximately 80–85 Riyals, with a market capitalization of 14–16 billion Riyals, and a price-to-earnings ratio ranging from 10–12 times, with annual distributions close to 3–4%. These figures reflect a pattern of valuation for stable companies with recurring profits. Naturally, NUPCO's final indicators will depend on its actual business results and business model, but it is likely to follow a moderate dividend distribution policy post-listing, with the possibility of increasing distributions in the future as financial performance improves. For more details about Hail Cement, you can visit the stock page.

Expectations for the healthcare sector in Saudi Arabia indicate continued growth in spending and expansion of localization and digital transformation programs until 2030, opening wide avenues for NUPCO's growth. The company's commitment to developing infrastructure, updating electronic systems, and expanding partnerships with the private sector enhances its competitiveness and ability to meet rising demand. Among the future opportunities are leveraging local manufacturing programs for medical supplies, participating in smart healthcare initiatives, and expanding distribution channels to include new areas. Challenges include the need to maintain operational efficiency, control costs, and adhere to the highest standards of governance and transparency after entering the financial market. NUPCO's success in meeting these requirements will determine its ability to maintain a sustainable growth pace and achieve the interests of new shareholders.