Saudi Arabian Mills prices IPO at top of indicated range to raise $271m

Image credit: Arabian Mills for Food Products Company

Saudi Arabian Mills for Food Products Company priced its initial public offering (IPO) at the top of its targeted range of SAR62 to SAR66 per share on Wednesday, raising SAR1.02bn ($271m), as the appetite for listings in the GCC region remains healthy.

Shareholders, including Ajlan & Bros, Sulaiman Abdulaziz Al-Rajhi International Company, and the National Agricultural Development Company (NADEC), sold 15.4 million shares to investors—equivalent to 30 per cent of the milling firm’s paid-up capital.

“The extraordinary demand we received for the institutional offering reflects the strong conviction those investors have in Arabian Mills, our strategic vision, and our proven ability to convert opportunities in the flour and feed market into sustainable and profitable growth. It also underscores the confidence in our operational capabilities, diversity and quality of our products, our commitment to R&D and innovation, and their belief in our team,” said Rohit Chugh, CEO at Arabian Mills.

The indicative price implies a market valuation of SAR3.4bn. Arabian Mills said that the retail subscription period will run from September 18 to September 19.

The Riyadh-based company hired HSBC Saudi Arabia as its sole financial adviser, global coordinator, and lead manager. Alrajhi Bank, Saudi Awwal Bank (SAB), and Banque Saudi Fransi are receiving agents for the individual investors’ tranche.

Arabian Mills revenues reached SAR862m in 2023, growing at a CAGR of 16 per cent from 2021, while its profit grew at a CAGR of 23.2 per cent to SAR200m during the period under review.

It has improved its cash generation ability, generating SAR238m in free cash flow in 2023, which represents a cash conversion rate of 27.5 per cent.

Founded in 2017, the milling firm was part of a wider privatisation programme under Saudi Arabia’s Vision 2030 strategy aimed at diversifying the oil-dominated economy. It was sold in 2021 to a consortium comprising Al Othaim Markets, Allana International and United Feed Manufacturing Company for $229m (SAR859m).

First Milling Company was the first of the flour milling companies to go public in an IPO that raised $266m in May 2023, and Modern Mills raised $320m from its public offering in March.

Earlier in September, Saudi Arabia’s Fourth Milling Company said it plans to sell a 30 per cent stake, equivalent to 162 million shares, through an IPO on the Saudi Exchange, while perfume retailer Al Majed for Oud Al announced its pricing for an offering that is set to raise as much as SAR705m.

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