JEDDAH, 9 January 2005 — An initial public offering (IPO) of shares in Saudi Arabia’s newly created Al-Bilad Bank will run from Feb. 21 to March 9, the bank said yesterday.
Spokesman Mohammad Al-Awadh said 30 million shares worth SR1.5 billion ($400 million), or half the new bank’s capital, at the rate of SR50 per share, would be floated.
Saudi Arabia’s Cabinet formally approved the launch of Al-Bilad Bank in November. It is the Kingdom’s 11th commercial bank.
The Kingdom has 10 commercial banks with assets exceeding $100 billion in addition to a branch of the Bahrain-based Gulf International Bank (GIB).
The Al-Bilad Bank move comes after the government licensed three major international banks — Deutsche Bank of Germany, BNP Paribas Bank of France and J.P. Morgan Chase Bank of the United States — to open branches in the Kingdom.
Saudi Arabia, the world’s largest oil exporter and one of the biggest economies in the Middle East, has the ability to absorb more banks.
Al-Bilad Bank was established by merging eight leading money exchangers in the country including Muhammad & Abdullah Ibrahim Al-Subaie Company, Al-Muqairen Money Exchange, Al-Rajhi Trading Est., and Al-Rajhi Commercial Foreign Exchange.
Al-Bilad’s founders will have a 50 percent stake in the bank. Muhammad & Abdullah Ibrahim Al-Subaie Company holds the lion’s share of 42 percent in Al-Bilad Bank while Al-Muqairen Money Exchange holds 18 percent, Al-Rajhi Commercial Foreign Exchange 16 percent, and Al-Rajhi Trading Est. 14 percent.
Other partners Muhammad Saleh Sairafi Est. will have a five percent stake in the bank while Injaz Money Exchange (Yousuf Abdul Wahab Niamatullah Company) will hold three percent, Abdul Mohsen Saleh Al-Amri Est. and Ali Hazza & Partners for Trade and Money Exchange one percent each, press reports said.
Ibrahim Al-Subaie, a member of the constituent committee, said the timing of Al-Bilad’s IPO would be suitable to the market need to absorb this large economic entity.
“Al-Bilad is going to make big successes, beginning from IPO to gaining good profits,” Al-Eqtisadiah business daily quoted him as saying recently. He said he expected the Al-Bilad IPO to be oversubscribed 20 times. Abdul Rahman Al-Ruwaitie, economic adviser to the bank, said Al-Bilad would open a new era of banking in the country, adding that it would support the private sector by offering new services and Islamic banking products.
Based in Riyadh, Al-Bilad will have branches in various parts of the Kingdom and will make use of modern technology and trained personnel to extend quality services. In the first phase it will have 30 to 40 branches.
“The new bank will operate on the basis of Islamic banking principles,” Dr. Yousuf Niamatullah of Injaz said earlier, adding that it would also provide investment services.
The founders have set up an experts committee to recruit qualified and experienced staff for the new bank.
Saudi Arabia’s state insurer the National Company for Cooperative Insurance (NCCI) said on Wednesday its SR1.435 billion IPO was 11.5 times oversubscribed. In October, a SR1 billion offering of stock in mobile phone operator Ettihad Etisalat was 50 times oversubscribed.
Given the robust performance of the Saudi equity market in recent quarters, a number of local firms are expected to go public in the coming months.
The market capitalization of Saudi bourse stood at SR1.149 trillion ($306.4 billion) by the end of 2004.
Gulf Arab investors are pouring liquidity from soaring oil prices into equities. It is estimated that by the end of 2005, some $9 billion will be raised through several IPOs in the six Gulf Cooperation Council (GCC) states of Saudi Arabia, Kuwait, Bahrain, Oman, Qatar and the United Arab Emirates (UAE).