Saudi Arabia’s Arabian Mills plans to list 30% on Tadawul

Image credit: Arabian Mills for Food Products Company

Saudi Arabia’s Arabian Mills for Food Products Company plans to sell a 30 per cent stake in a Riyadh initial public offering (IPO), making it the third flour milling company to go public after the government privatised the industry.

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. This follows the approval received from the Capital Market Authority in June 2024.

“The decision to go public is a decisive one toward accelerating our growth trajectory. Since our privatisation in 2021, we have significantly scaled the business, increased profitability margins, and strengthened our market share,” said Rohit Chugh, CEO of Arabian Mills.

“Looking ahead, the growing market for flour, feed, and bran in the kingdom presents compelling opportunities, and we are well-positioned to capitalise on robust demand through continuous innovation and quality enhancements.”

Arabian Mills hired HSBC Saudi Arabia as the 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.

The milling firm is offering the shares in two tranches—to institutional investors and retail investors—between September 1 and September 19. The Riyadh-based company said the final offer price will be determined after the book-building period.

Founded in 2017, Arabian Mills 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).

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.

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.

The MENA region’s listing activity remained resilient in Q2 2024, with 14 IPOs raising $2.64bn in proceeds, according to EY. Saudi Arabia led the listing activity with 11 public offerings, five of which were on the Tadawul.

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