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| 21 February, 2017

Riyadh seeks bank advisers for privatisation of Saudi Postal Corp

Image used for illustrative purpose only.  A Royal Mail post box stands on a street corner in Manchester, northern England September 12, 2013. Britain embarked on its largest privatisation in decades on Thursday as the government unveiled plans to sell the majority of the near 500-year-old state-owned Royal Mail postal service. The Department for Business said a stock market flotation would take place in coming weeks, giving the public a chance to buy into the postal network. Ten percent of the shares will be given to Royal Mail staff.REUTERS/Phil Noble

Image used for illustrative purpose only. A Royal Mail post box stands on a street corner in Manchester, northern England September 12, 2013. Britain embarked on its largest privatisation in decades on Thursday as the government unveiled plans to sell the majority of the near 500-year-old state-owned Royal Mail postal service. The Department for Business said a stock market flotation would take place in coming weeks, giving the public a chance to buy into the postal network. Ten percent of the shares will be given to Royal Mail staff.REUTERS/Phil Noble

Phil Noble
By Hadeel Al Sayegh and Celine Aswad

DUBAI, Feb 21 (Reuters) - 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.

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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.

(Editing by Andrew Torchia) ((andrew.torchia@thomsonreuters.com; +9715 6681 7277; Reuters Messaging: andrew.torchia.thomsonreuters.com@reuters.net))