Saudi Arabia's wealth fund seeks IPO of information security firm Elm: sources

DUBAI/RIYADH (Reuters) – Saudi Arabia’s sovereign wealth fund is considering an initial public offering of its information security company Elm, three sources familiar with the matter told Reuters.

The $300 billion Public Investment Fund sent banks a request in recent weeks to come up with proposals on how to go ahead with a sale of Elm shares to the public, said two of the sources, declining to be named as the matter is not public.

It was not immediately clear how big the deal would be.

One of the sources said the PIF plans to sell up to 30% of the company in an IPO, which would be “mid-sized”. The same source said investors should expect more of an exit strategy by the fund over coming period.

The PIF and Elm did not immediately respond to requests for comment.

Elm is fully owned by the PIF and provides secure e-business services and information technology and project support services and government project outsourcing in Saudi Arabia, according to information on its website.

A second source said the sovereign wealth fund’s request for proposal (RFP) had asked banks to submit a bid bond, a debt instrument secured by a bidder, and a performance bond, which is a bond issued by a bank or other financial institution.

The first source and a third source said a deal was unlikely to take place before next year.

Last year Elm participated in the series A+ round of financing for Syarah, an online marketplace for buying and selling cars in Saudi Arabia, information on Elm’s website shows.

PIF’s strategy is two-pronged; building an international portfolio of investments and investing locally in projects that will help reduce Saudi Arabia’s reliance on oil.

Last year, the PIF’s recycling unit acquired a 100 percent stake in Saudi firm Global Environmental Management Services and the fund said it planned to increased its stake in ACWA Power to 40 percent from 25 percent.

The head of the fund, Yassir al-Rumayyan, said last month there would be plenty of potential for investment opportunities once the coronavirus crisis passes.

Rumayyan said the PIF was looking into investment opportunities in areas such as aviation, oil and gas and entertainment.

Earlier this year the Saudi fund bought stakes in Royal Dutch Shell, Total, Eni and Equinor , a source familiar with the transactions told Reuters on April 9.

PIF already has a $2 billion stake in Uber Technologies and electric car company Lucid Motors. It used to own a small stake in electric carmaker Tesla, but the latest filing did not show any exposure.

The fund earlier on Sunday denied a media report that it was planning for a margin loan backed by its investment in SoftBank Group Corp’s (9984.T) Vision Fund.

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