United Carton shares drop after $160m IPO amid market flux in Saudi Arabia

28/05/2025 02:12 AST

United Carton Industries Co.'s stock fell after the Saudi packaging manufacturer's $160 million initial public offering in Riyadh, a sign that broader market turbulence may be impacting Middle Eastern listings.

Shares in the firm closed 1.5% lower at 49.25 riyals apiece on Tuesday after rallying as much as 9%. At one point, the shares dropped 2.8% from the offer price of 50 riyals.

It's the first Middle Eastern company to list since US President Donald Trump announced sweeping tariffs on April 2.

UCIC, as the company is known, raised 600 million riyals ($160 million) via the first-time share sale. Its offer price was the top end of a marketed range and implied a market capitalization of around 2 billion riyals. The mixed debut comes despite the firm drawing $20 billion in orders for the offering.

Valuations for the company were also "a bit stretched," which may have contributed to the share price performance, said Chiro Ghosh, vice president for sell-side research at SICO Bank.

The mixed start is a rarity for trading debuts in the kingdom, where companies often hit the maximum price increase allowed on listing day. Although the Gulf is seen as relatively insulated from US tariffs, regional exchanges have been impacted by the turmoil. Saudi Arabia's main stock index is down over 8% since late March. Lower oil prices also threaten the growth prospects of the energy-reliant economies.

Still, several Middle Eastern companies - including an airline, a hospital operator and a real estate investment trust - have pushed forward with plans to go public since the sweeping tariffs were announced and they've seen heavy levels of over-subscription.

United Carton generated 671 million riyals in revenue in the first half of last year and commands as much as 40% of Saudi Arabia's corrugated carton market, according to its IPO prospectus.

Gulfnews