Saudi Arabian Mills sets IPO price range, seeks to raise $271m

Image credit: Arabian Mills for Food Products Company

Arabian Mills for Food Products Company’s initial public offering (IPO) in Riyadh, which aims to raise SAR1.02bn ($271m) at a price range of SAR62 to SAR66 per share, was fully covered within an hour of books opening amid robust appetite for listings in the Gulf region.

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

The indicative price implies a market valuation of as much as SAR3.4bn. Arabian Mills is offering the shares in two tranches—to institutional investors and retail investors—between September 1 and September 19. It said the final offer price will be determined after the book-building period.

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.

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.

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.

Arabian Mills’ listing plans and orders come just a week after Saudi perfume retailer Al Majed for Oud Al announced its pricing for an offering that is set to raise as much as $188m (SAR705m).

Read: Saudi Arabia’s Al Majed for Oud seeks to raise $188m from IPO