RIYADH, 5 April 2006 — The General Organization for Social Insurance (GOSI) has bought 5.62 percent of Saudi Research & Marketing Group (SRMG) ahead of SRMG’s initial public offering (IPO) set for April 8.
“GOSI’s share in the company will be reduced to four percent after the IPO,” the SRMG said. The company offers 30 percent of its shares (24 million) in the IPO at the rate of SR46 including the premium.
Prince Faisal bin Salman, chairman of SRMG’s board of directors, expressed his delight over GOSI’s move being a pioneer in long-term and stable investments.
“GOSI is well known for its professional investment policies,” Prince Faisal said, adding that its partnership would strengthen the company.
“This will expand the base of strategic investors and support the company’s future expansion plans,” he added.
Suleiman Al-Humaid, governor of GOSI, said his organization decided to invest in SRMG considering its track record. “It also reflects our confidence in the future of the publishing industry in the Kingdom and in the Arab world,” he added.
Azzam M. Al-Dakhil, the group’s executive vice president, said SRMG was the first company to go public after the recent decision taken by the Capital Market Authority (CMA) splitting the nominal share value from SR50 to SR10 per share.
“The value of an SRMG share is now SR46 after the share split and after adding the premium,” Al-Dakhil said. Earlier the price was set at SR230 per share including premium, he explained. A single buyer can purchase a maximum of 25,000 shares and a minimum of 50 shares.
The floatation, worth SR1.104 billion, would be the largest so far this year. SRMG has reported a 10.4 percent rise in turnover in 2005 to SR1.063 billion while its profits soared to a record SR181.4 million.
“Last year’s performance was the best in the company’s history. There was a 12 percent increase, or SR113.6 million in sales, compared to 2004 with total sales of SR1.063 billion,” the company said in a statement.
The company will increase its capital in two phases from SR600 million to SR800 million by transferring from 2005 reserves and profits.
The IPO will be managed by the Samba Financial Group, which will also act as its financial adviser. Eissa Al-Eissa, the managing director and CEO of Samba, expected big demand for SRMG shares in view of the group’s track record and status as a leading publishing organization in the region and its robust performance.
“Samba is keen on employing its expertise and potential to provide an ideal environment to conduct the IPO maintaining the highest values and transparency to succeed this experiment which is considered the first IPO of a media group in the Arab world,” Al-Eissa said.