Arabian Mills for Food Items Organization’s first sale of stock (Initial public offering) in Riyadh, which plans to raise up to SAR1.02bn ($271m) on Tadawul main market was fully covered in no less than an hour of books opening. This showed robust investors’ appetite for IPO in Gulf region and will support a further burst of activity in KSA IPO market.
Arabian Mills shareholders, including Ajlan and Brothers, Sulaiman Abdulaziz Al-Rajhi Global Organization, and the National Agricultural Development Company (NADEC), are offering 15.4 million shares to investors (comparable to 30 percent of the milling firms’ paid-up capital, at a price range of SAR 62 to SAR 66)
The indicative price implies a market valuation of as much as SAR3.4bn. Arabia Mills is offering the shares in two tranches — to institutional financial investors and retail financial investors — between September 1 and September 19. It said the final offer price will be determined after the book-building period.
Arabian Mills 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 according to sources.
Arabian Mills is the fourth Saudi flour milling company to announce plans to go public, after the government split the state-controlled industry into four firms and sold them to the private sector. First Milling Organization was the first of the flour milling organizations to open up to the public in an Initial Public Offering that raised $266m in May 2023, and Modern Mills raised $320m from its IPO in March.
Arabian Mills is a leading food manufacturer of flour and livestock and poultry feed catering to the food security vision of Saudi Arabia. Arabian Mills revenues reached at SAR862m in 2023, growing at a CAGR of 16% from 2021, while its profits grew at a CAGR of 23.2 percent to SAR200m during the period under survey.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.
This IPO believes to be natural step for Arabian Mills to grow, expand and meet the growing demand from KSA’s growing F&B and agribusiness while furthering ever-evolving ambitions – accordingly to statement released by one of the shareholders of Arabian Mills.
