United International Transportation Company (Budget Saudi Arabia), one of the leading companies in the car rental sector in the Kingdom of Saudi Arabia, announced that the Extraordinary General Assembly approved a 33.74% increase in the company’s capital, bringing it to SAR 1.045 billion, in a strategic move aimed at strengthening its financial position and supporting future growth plans.
Historical background and context of the decision
Budget Saudi Arabia was founded in 1978 and has since established itself as a major player in the Saudi transportation market. Its listing on the Saudi Stock Exchange (Tadawul) has provided it with a strong capital base, enabling its continuous expansion. The current capital increase is not a random decision, but rather an extension of a series of strategic decisions aimed at keeping pace with the Kingdom's rapid economic developments, particularly in the tourism, logistics, and entertainment sectors, which are key pillars of Saudi Vision 2030. The company is funding this increase from its own resources by capitalizing a portion of retained earnings, reflecting its strong financial performance and its ability to finance its growth internally without resorting to borrowing.
The importance of the decision and its expected impact
Domestically, this increase enhances Budget Saudi Arabia’s ability to expand its vehicle fleet, develop its infrastructure, and offer innovative services that meet the growing demand from individuals and businesses. Allocating a portion of the shares to an employee incentive program is also an investment in human capital, ensuring the attraction and retention of talent. On a broader economic level, the growth of leading national companies like Budget Saudi Arabia contributes to strengthening the non-oil economy and supports the booming services sector. This decision is expected to positively impact investor confidence in the company’s stock and enhance its long-term market value, making it an attractive option in the Saudi stock market.
Details of the capital increase
According to the company's official statement on the Tadawul website, the Board of Directors' recommendation to increase the capital from SAR 781.66 million to SAR 1.045 billion through the issuance of 26,375,556 new shares has been approved. This increase will be funded by capitalizing SAR 263.75 million from retained earnings. The new shares are distributed as follows:
- Bonus shares for shareholders: 26,055,556 shares will be granted to shareholders registered at the end of the day of the meeting, at a rate of one share for every three shares owned.
- Employee Incentive Program: 320,000 shares will be allocated to the long-term Employee Incentive Stock Program.
The assembly also approved amending Article 7 of the company’s articles of association relating to capital to reflect this increase, and authorized the board of directors to take the necessary actions to implement the decision.
