Saudi Arabian milling firm MC4 seeks to raise $228.9m from IPO

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Saudi Arabia’s Fourth Milling Company (MC4) has started taking investor orders for its initial public offering (IPO) and seeks to raise as much as $228.9m (SAR859m), capitalising on the robust appetite for listings in the GCC region.

MC4 is offering 162 million shares, equivalent to 30 per cent of the company’s total issued share capital. The indicative share price of SAR5 and SAR5.30 per share implies a market valuation of around SAR 2.8bn ($763.2m).

The company said the offering price will be determined at the end of a book-building process. It is offering the shares in two tranches — institutional investors and retail investors— between September 15 and September 19.

MC4 hired Riyad Capital as its sole financial adviser, global coordinator, and lead manager. Riyad Bank and Arab National Bank are receiving agents for the individual investors’ tranche.

“Since the privatisation in 2021, Fourth Milling Company has been on a path of significant transformation. Our focus has been on enhancing operations, fortifying our market position, and driving revenue growth while adopting leading governance practices,” said Khalid Al Maktary, the CEO of MC4.

“We achieved a 31.1 per cent share (volume share) in the consumer market, representing the highest among all flour brands. Our revenue saw a compound annual growth rate of  29.7 per cent from 2021 to 2023.”

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).

MC4’s revenues reached SAR556m in 2023, growing at a CAGR of 29.7 per cent from 2021, while its profit rose from 14.9 per cent to 25.2 per cent during the period under review.

It has improved its cash generation ability, generating SAR163m in free cash flow in 2023, and it plans to pay 70 per cent of its annual net profits as dividends each year.

The company produces flour, feed, bran, and diverse wheat derivatives and operates factories in Riyadh, Medina, and the country’s eastern region. Its daily milling capacity is 3,150 metric tonnes of wheat grains, and it produces 450 tonnes of animal feed daily.

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, Arabian Mills priced its IPO at the top of its targeted range of SAR62 to SAR66 per to raise SAR1.02bn ($271m).

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