Saudi Arabia's United Carton Industries is nearly done with IPO - now, new markets

First published on Gulf News on 16/05/2025

Dubai: Buying a paper mill in Dubai in 2023, launching an IPO in its home market of Saudi Arabia this year – things are definitely going to plan for United Carton Industries.

The investor response to the company’s public offer has been robust, being 126 times oversubscribed from institutional investors. This despite the sheer number of Saudi companies that have gone public so far this year.

Investors are looking for growth stories in their stock picks and in Saudi Arabia it sure seems they are getting them. (flynas, the budget airline, certainly did…)

United Carton Industries answers that description of having seen growth and being good for more. The packing industry continues to put in solid year-on-year numbers, and those entities with an existing sizable market share will always have the investor attention.

“In 2024, we had revenues of over SR1 billion,” said Mohnish Rikhy, CEO of United Carton Industries. “From 2022, we started diversifying into synergistic businesses after starting in corrugated (packaging). We then entered the paper business in the UAE through buying the paper mill in Jebel Ali.

“Today, we are the market leaders for corrugated packaging in Saudi Arabia, with 37%-40%.

“Our current growth has come from both organic and non-organic sides of the business.”

Investors seem to be taking note of the fine print. United Carton Industries set the IPO price at SR50 a share, which is the top of the earlier announced price range. This will set up an initial listing market cap of SR2 billion. (Institutional book-building came to around SR75.8 billion, representing a coverage of over 126 times.)

The Jeddah-headquartered company is offering 30% via the float.

More geographical expansion

While the formal Tadawul listing is next on the to-do list, UCI is already mapping out plans for further geographical moves.

What’s rather unique about UCI is that it has gone public from an industry where its main players have remained steadfastly privately-owned enterprises. And mostly family-owned businesses at that.

“Our objective in getting into the UAE was that it was the second largest packaging market in the region,” said the CEO. “So, if we had 37%-40% share of the biggest market – Saudi Arabia – then the natural expansion would be to get into the second largest. That’s done.

“Now, we need to get into the other GCC markets.”

The IPO and Tadawul listing will certainly help on the visibility.

On packaging industry margins, Rikhy said: “If you look at our normalized EBITDA of 14%-16% and compare with industry peers, we are quite in line. What we will look at is how to grow it in value terms, and then we can naturally talk about organic and inorganic growth. That’s the target.”