The Saudi Company for Hardware (SACO), a leading retailer in the Kingdom of Saudi Arabia, announced the signing of a Sharia-compliant credit facility agreement with the National Commercial Bank (NCB), totaling SAR 150 million. This move is part of the company's strategy to strengthen its financial position and diversify its funding sources to support its future operational and expansion plans.
Details of the agreement and its strategic objectives
According to the official statement published by the company on the Saudi Stock Exchange (Tadawul) website, the financing term extends for 12 months and is primarily intended to finance working capital and cover the necessary letters of credit for purchasing and import operations. The company clarified that the collateral provided for this facility is a promissory note valued at SAR 165 million. This financing reflects SACO's ability to secure the necessary cash flow to ensure the smooth continuity of its operations, meet increasing market demand, and maintain optimal inventory levels in its showrooms across the Kingdom.
General context and importance of the move for the retail sector
Founded in 1985, SACO has successfully established itself as a leading consumer destination for hardware, tools, and home and garden improvement supplies. This agreement comes at a time of significant growth in the Saudi retail sector, driven by the Kingdom’s Vision 2030 initiatives aimed at diversifying the economy and enhancing the purchasing power of citizens and residents. Securing financing from a leading financial institution like the National Commercial Bank (NCB) not only reinforces confidence in SACO’s operating model and financial stability but also underscores the dynamism of the private sector and its ability to attract the investments necessary for growth.
Expected impact on company performance and the market
This agreement is expected to have a direct and positive impact on SACO’s financial and operational performance. By securing working capital financing, the company will be able to improve its cash flow efficiency and manage its short-term obligations more effectively. Furthermore, the facilitated letters of credit will enable SACO to strengthen its relationships with international suppliers and ensure a continuous flow of goods, thus mitigating the risk of supply chain disruptions. More broadly, such transactions reflect the fruitful collaboration between the banking sector and commercial enterprises in the Kingdom, contributing to the growth of the non-oil economy and the achievement of sustainable development goals.
