Name a sector and there's a good chance that there is heavy recruitment going on in Saudi Arabia. This is where SMASCO, the biggest manpower solutions firm in the Kingdom, get its IPO timing just right. Image Credit: Supplied

Dubai: Saudi Arabia’s job market is riding a wave of new openings, salary hikes, and emerging sectors creating new positions for a fast-expanding pool of talent.

Also riding high are the Kingdom’s manpower solutions companies, with the biggest of them, SMASCO, which has just gone through a high-profile IPO.

“As of 2023, SMASCO holds a robust market presence with a 14 per cent share in the corporate sector and 16 per cent in the individual market within Saudi Arabia,” said Ayman Al Tammami, CEO.

“We were the first authorized manpower solutions company in Saudi Arabia, offering end-to-end services from recruitment to deployment and management of personnel. Our decision to pursue an IPO at this time is due to several strategic factors that align with our market share and operational success.

"We serve more than 3,000 corporate clients and almost a million individuals – this is the market we are providing a number of services to where we can grow."

In the public offer, the stock was priced at SR7-SR7.5, with SMASCO planning to raise between SR840 million to SR900 million. The IPO size is 30 per cent.

Ayman Al Tammami, CEO of SMACO: 'The tighter (recruitment) norms benefit organizations like SMASCO, which have established systems, good corporate governance and processes to ensure compliance...' Image Credit: Supplied

It’s been another exceptionally strong phase for Saudi Tadawul, which has had 16 IPOs already this year. The biggest among them was the healthcare provider Fakeeh Care Group, which raised SR2.9 billion ‘based on the top end of the price range and indicating a market cap of more than SR13 billion’, says Junaid Ansari, Director of Investment Strategy and Research at Kamco Invest.

“We believe that retail demand has always been upbeat in regional IPOs, especially for the ones that come as part of state privatization plans. These companies have a proven business model and a strong growth story.

“In addition, with only a few large-cap IPOs in the region, the demand tends to be higher for bigger companies in the region.”

SMASCO’s near-term plans

For SMASCO, the growth narrative looks likely to continue awhile, as the various projects across sectors create new demand for jobs, whether it’s for highly skilled personnel or blue-collar positions.

“We – sure - have noticed the recruitment growth,” said Al Tammami. “In fact, the world has seen this change in Saudi Arabia.

“With mega-projects underway – NEOM, Qiddiya, the Red Sea - there is strong demand for manpower across various sectors. Initiatives like Saudization are transforming the manpower sector. Additionally, the digital transformation across industries in Saudi Arabia is also spurring the need for new skillsets, with manpower solutions evolving to meet the demand for digitally skilled workers.”

Regularizing recruitments

As in other Gulf economies, Saudi Arabia too has tightened the rules on recruitment. Licensed manpower companies have the writ when it comes to placements, which is then backed by ironclad agreements between the employed and employer.

"As a licensed manpower solutions provider, SMASCO adheres closely to these regulations," said the CEO. "Our business practices are continually updated to align with new legal requirements. The tighter norms benefit organizations like SMASCO."

Market analysts say SMASCO’s leading market share is what makes the IPO a top draw, even when investors have seen multiple offerings through the last two years and more.

Just look at these numbers - the Saudi Tadawul had 35 IPOs in 2023 out of the 46 IPOs that the GCC accounted for, and raising $3.5 billion during the year, according to Kamco Invest.

Comparatively, 2022 saw 36 IPOs on the Tadawul out of the 48 GCC markets during the year, raising $10.2 billion.

“There are two sides of focus which is enablement factors and the sector specialization,” said the SMASCO CEO. “In terms of sector specialization, we specialize across all manpower services required within the Saudi market.

“We have a second level of specialization where we build our vertical (solutions) in a sector. For example, we have a sector team specialized in oil and gas, and then another vertical which is for logistics, healthcare, construction, and hospitality.

“The IPO is a normal milestone for us as part of our - successful - journey. The combination of our strong market position and financial stability - alongside a favourable market environment for IPOs in Saudi Arabia - convinced us that now is the right time to go public.”

SMASCO’s investors will second that…