RIYADH, 19 July 2004 — Almarai Company Ltd., a leading Saudi food producer with 40 percent market share in the Gulf for dairy products, will go public by the end of this year.
This was announced by Prince Sultan ibn Mohammed ibn Saud Al-Kabir, Almarai’s chairman and founder of the company, who said the Initial Public Offering (IPO), to be managed by the HSBC Group and the Saudi British Bank, would enable Saudi citizens to share in the company’s prosperity and participate in its future plans.
Earlier, SABB was involved in managing the STC (Saudi Telecom Company) Initial Public Offering. The Public Investment Fund, the Kingdom’s investment arm, has also appointed SABB and the HSBC Group to provide financial and consultancy services with regard to NCCI’s intended IPO.
In his announcement, Prince Sultan Al-Kabir said that Almarai is the largest integrated food company in the Middle East producing a wide range of dairy, juice, cheese and other food products. He said this achievement translates into a 40 percent market share in the fresh dairy markets in the GCC. With a work force of 4,000 employees and 45,000 head of cattle, it produces 1.6 million liters of fresh milk daily distributed in the Gulf region. Almarai has 500 refrigerators, 28 storage facilities and 30 distribution centers in the Gulf.
Founded in 1976, Almarai’s current shareholders include Prince Sultan ibn Mohammed ibn Saud Al-Kabir (54.13 percent), Savola Co. (40.33 percent), Abdul Aziz Al-Muhanna (3.82 percent). Abdulrahman Al-Muhanna (1.70 percent).
Almarai’s decision to go public comes on the heels of Alujain Corporation which has announced the successful completion of a SR346 million capital increase, which was oversubscribed 3.5 times with a total cash collection of SR1.2 billion.
Currently, the number of listed companies on the Saudi stock market has reached 70 involving a total capitalization of over SR700 billion. Market sources point out that one of the major results of the new capital law could be a wave of family-owned Saudi companies being listed on the stock exchange.
Economists say that once the by-laws are approved, companies may also be allowed to issue corporate bonds and banks and brokers will have a bigger role on the liberalized stock market, according to Alhassan Goussous, head of investment services at the Saudi British Bank. The bank is 40 percent owned by HSBC Holdings, which has applied for a Saudi investment banking license.
According to him, most of the capital by-laws have already been formulated and are now awaiting government approval.
One of the first results of the new law could be a wave of family-owned Saudi companies listing on the stock exchange.
Foreigners can only invest through mutual funds for now. The law should eventually allow direct foreign investment in stocks but economists say the dearth of shares and high cash liquidity among Saudi investors suggest no immediate urgency. “There’s no real depth to the market right now,” said one Saudi economist. “There’s a limited number of shares even for the Saudi investors.”