Lumi Rental Announces Its Intention to Proceed with IPO and Listing of Its Shares on Saudi Exchange Main Market

Lumi, one of the leading car rental and leasing companies in the Kingdom of Saudi Arabia (the “Kingdom”), announced on Thursday its intention to proceed with an initial public offering of its ordinary shares on the Saudi Exchange’s Main Market. On 29 March 2023G, the CMA approved the Company’s application for the offering of 16,500,000 Offer Shares, representing 30% of the Company’s total issued share capital. The offer price range for the Offer Shares will be announced on 30 August 2023G, and the final offer price for the Offer Shares will be announced on 7 September 2023G, following the institutional bookbuilding process. The net proceeds of the Offering will be received by the Selling Shareholder, Seera Group Holding (formerly known as Al Tayyar Travel Group).

The planned IPO marks an important milestone in Lumi’s growth journey, during which time it has become one of the leading car rental companies in the Kingdom. Lumi is focused on building a strong pipeline of future revenue and asset growth, achieving greater scale and market share, and further growing its operations and profitability.

Engineer Mohammed Bin Saleh Al-Khalil, Chairman of Lumi, commented: “It gives us great pleasure to announce the start of our IPO process, another remarkable milestone for Lumi. We are proud to have grown from a breakeven business to a billion-riyal market leading player in less than a decade. This has been made possible by the dedication and support of our management team, our Board members and      shareholders. The IPO provides an opportunity for investors to participate in a sector that is benefitting from powerful macroeconomic and structural tailwinds and is positioned for significant growth. With our own growth accelerating, this is an exciting time to invite investors to share in our onward journey of success.”

Syed Azfar Shakeel, Chief Executive Officer of Lumi, said: “As one of the leading players positioned for growth in the land mobility sector, we are delighted to have announced our intention to float on the Saudi Exchange. Lumi is a fast-growing local player operating in a large and expanding market. With a dynamic and holistic business model, our operations are enabled by one of the largest active fleets in the Kingdom. Our service offering across rentals, leasing and used car sales caters to a wide client base, with industry-leading customer service delivered through an omnichannel platform. Driven by a seasoned leadership team and a diverse and committed workforce, we are ideally positioned to continue to build on our robust financial profile, in pursuit of dynamic growth and shareholder returns.”

Company overview and business activities

• Lumi is one of the leading car rental companies in the Kingdom with a unique and diverse offering, including lease services to Corporate and Government sector clients, car rentals via digital channels and a network of 35 airport and city branches across the Kingdom, and used car sales.
• Lumi was established by Seera Group Holding in 2006G as a sole proprietorship to provide car rental services amongst a portfolio of travel companies. In 2016G, as part of the transformation programme to steer Seera Group Holding in a new, more focused direction, strategic plans for Lumi were reconfigured and an expert management team was mobilised.
• Since 2016G, the Company has achieved a high rate of growth, increasing from a fleet size of 3,603 vehicles to 24,730 vehicles as of 30 April 2023G.

• The Company’s business consists of three reportable segments:

  1. Vehicle Lease: long-term lease of commercial and non-commercial vehicles to corporate and Government sector entities. Lease services include fleet procurement, maintenance, insurance, vehicle replacement, and roadside assistance.
  2. Car Rental: car rental and related services to retail customers and corporate clients via 35 airport and city branches across the Kingdom, as well as through digital channels including website, mobile application, call centre and WhatsApp. Rental services include car rentals, motorcycle rentals, chauffeur services and extra services (flexible drop-off, extra insurance, cross-border permits, optional child seats).
  3. Used Vehicles Sales: sales of used vehicles from the Company’s own lease and rental fleet through a bidding process or a car showroom. Lumi does not sell any third-party used vehicles.

Strategy for growth

The following three pillars are the basis of Lumi’s growth strategy:

1.     Building a pipeline of future revenue and asset growth through vehicle lease contracts with corporate and Government clients

2.     Achieving scale, adding to growth of operations and profitability as a car rental business

3.     Fleet disposal at maximised purchase price recovery

Strengths and competitive advantages

A number of factors enable the Company to pursue and achieve sustainable and profitable growth, while competing successfully with its peer group. These include:

1.     Omnichannel service platform

2.     Efficient fleet procurement and strong relationships with suppliers

3.     Maintenance infrastructure

4.     Continuous digitalisation of the offering

5.     Supportive shareholder with a strong reputation

6.     ISO-certified and award-winning business

Summary of financial performance

Lumi reported revenue of SAR 782.6 million in 2022G, achieving year-on-year growth of 50.1%; and revenue of SAR 500.0 million in the first half of 2023G, increasing by 48.6% compared to the first half of 2022G.

• Lumi reported EBITDA of SAR 437.3 million with an EBITDA margin of 55.9% in 2022G, achieving year-on-year growth of 37.7%. The Company reported EBITDA of SAR 271.7 million, with an EBITDA margin of 54.3%, in the first half of 2023G, achieving growth of 28.8% compared to the first half of 2022G.
• Net income increased by 35.4% year-on-year to SAR 143.7 million in 2022G (at a net income margin of 18.4%). In the first half of 2023G, net income increased by 38.8% to SAR 100.0 million (with a margin of 20.0%) compared to the first half of 2022G.
• The total value of the Company’s assets as of 30 June 2023G was SAR 2,238.9 million, compared to SAR 1,844.3 million as of 31 December 2022G.

 Saudi economy and transportation sector offer structural tailwinds

The Kingdom has the largest economy in the MENA region, with nominal GDP of approximately SAR 3,207 billion as of 31 December 2021G. Saudi Vision 2030, announced in 2016G, reflects an ambitious, yet achievable, blueprint to transform the Kingdom into a diversified economy, with non-oil Government revenues projected to increase sixfold to SAR 1 trillion by 2030G.

Transportation is a key sector for the Saudi Government. Supported by the strategic geographical location of the Kingdom with access to local, regional and international centres, as well as its unique position as the heart of the Arab and Islamic worlds, Saudi Vision 2030 heightens the transport sector’s aspirations by transforming the Kingdom into a logistics hub and enhancing liveability across the country. The regulatory environment has recently experienced a number of critical reforms aimed at transforming passenger mobility rental services in the Kingdom into a world-class system to support wider national growth plans across other sectors of the economy.