RIYADH: Saudi Arabia has invited banks to pitch for an advisory role in the sale of Saudi Postal Corp to investors, sources familiar with the matter told Reuters. The kingdom is launching a privatisation drive as part of wider economic reforms which aim to boost efficiency and ease pressure on state finances in an era of cheap oil.
Saudi Postal, the government-owned postal service, sent a request for proposals to local banks last month, according to bankers who spoke on the condition of anonymity because the matter is not public. No decision on which banks will participate has been made, two bankers said. The Ministry of Communications and Information Technology did not respond to a request for comment. Last June, telecommunications minister Mohammed al-Suwaiyal said the kingdom was likely to start privatising Saudi Postal, which has over 10,000 staff, by early 2017. Suwaiyal said that in preparation, the government was looking at a plan to create a postal holding company which would own subsidiaries operating services such as mail, courier delivery, e-commerce and financial remittances.
Authorities were studying issues such as how much of Saudi Postal would be sold and whether the stake would be offered to the public in an initial public offer of shares or to local or foreign strategic investors, he said. The government hopes privatisation will allow the state to cease financial support for Saudi Postal – annual government subsidies to it are projected to fall to zero by 2020 from 2 billion riyals ($533 million) now – while boosting its performance, so that its revenues rise to 2.75 billion riyals in 2020 from 1.02 billion riyals in 2015.
