JEDDAH, 7 July 2005 — More than 260,000 Saudis have applied for shares worth SR1.6 billion ($427 million) in the first two days of an initial public offering by dairy firm Almarai, the lead underwriter said yesterday.
Saudi British Bank said in a statement posted on the Saudi stock market website that it expects demand to grow for the offering, which began on Monday and ends on July 13. The IPO is already 70 percent subscribed.
Almarai aims to raise SR2.3 billion through selling 4.5 million shares, or 30 percent of its stock, each priced at SR512. The listing values the firm at SR7.68 billion in total. Only Saudis are eligible to subscribe and applications should be for a minimum of 10 shares and a maximum of 5,000.
Sulaiman Al-Hamdan, deputy-managing director of the Saudi British Bank and manager of the underwriting, said, “the Almarai underwriting did not affect the bank operation because of introducing high technology means to facilitate buying the stock, such as ATM machine, bank phone, Internet and to provide applications in all bank branches.”
The Almarai underwriting witnessed weak attendance by middle-income stock buyers in the first day for many reasons. Unlike the Etisalat and Albilad stocks, which were SR50 per share, the price of Almarai stock was SR500 per share, which was according to many people interviewed very high. A bank employee said that the attendance on the first day was normal. He said, “The attendance was weak and not like the previous Albilad and Etisalat stocks. It is due to the high price specified by the company, which eliminated large segment of society that cannot participate.”
Hashim Al-Imam, Saudi citizen, said, “SR500 per share is very expensive for me. I wish if it was less than then like Albilad, which was very attractive for me. I made SR2,600 in profit from selling Albilad stocks. How many stocks would I buy with my modest salary?” Fareed Ahmad, Saudi citizen, said, “There are many factors that lead to the weak attendance. One of reasons is that limited banks are carrying the stock operation and because many Saudis are out on summer vacation. I did not buy it because I think it is very expensive. The stock market is not attractive these days because all the stocks are down.”
Almarai, 40 percent owned by Saudi food group Savola, says it is the largest food exporter in Saudi Arabia with 4,000 staff, 45,000 livestock and a processing capacity of 1.4 million liters of milk a day. A source close to the offering said Almarai made SR372 million net profit last year on turnover of SR2 billion.
— With input from agencies