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Saudi chemical group SABIC studies IPO of its Gas Unit

Saudi chemicals group SABIC announced on Wednesday that it is evaluating strategic options, including an IPO, for its National Industrial Gases Company. This comes amid a review of the company's business.

SABIC stated in a press release that the move is in line with the company's portfolio optimization strategy and its core business focus. It added that an IPO for GAS will be aimed at improving "the group's financial position and value added to shareholders".

Chemicals industry is struggling with low demand and high input cost, which has led to lower prices and squeezed profit margins.

SABIC is one of the largest petrochemicals firms in the world and 70% owned by Saudi Aramco. In May, it reported a net loss for its first quarter of $323,000,000, citing an increase in operating costs as well as high feedstock prices.

It also announced earlier this year that it would cut costs, find new investment options and restructure some core assets while offloading noncore businesses.

The company has already sold its stakes to state-owned Saudi entities in Aluminum Bahrain (Alba), and Hadeed Steel.

SABIC announced on Wednesday that the study "remains ongoing" and that each option is subject to financial, technical, regulatory, and economic assessments.

According to LSEG, its shares have dropped 16.3% since the start of the year.

(source: Reuters)