RIYADH, 6 April 2006 — The state-owned Pension Fund has bought 5.62 percent of Saudi Research and Marketing Group (SRMG) before the company goes public on April 8, it was announced here on Tuesday. The announcement follows the purchase of an equal number of shares by the General Organization for Social Insurance (GOSI). Both organizations will have a four percent stake in the company after the initial public offering (IPO).
Muhammad Al-Kharashi, governor of the Pensions Fund, said his organization had decided to invest in the company considering its excellent financial performance.
“We also foresee a shining future that awaits the publishing industry in the Kingdom and the Arab world,” he said. “The group’s move to diversify into the publishing industry also offers promising investment opportunities,” Al-Kharashi pointed out.
He said his organization was looking for investment opportunities that would guarantee profitable returns.
Appreciating the Pension Fund’s move, Prince Faisal Bin Salman, chairman of SRMG’s board of directors, said it added to professional investors in the group.
The fund invests 73 percent of its total assets, or more than SR26 billion in the Saudi stock market.
The number of pensioners rose by 7.6 percent last year while a sum of SR150.4 billion has been distributed in pension payment over the past few years; SR17 billion was distributed in 2005.
SRMG offers 30 percent of its shares (24 million) in the IPO at the rate of SR46 including the premium. SRMG is 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,” said Dr. Azzam Al-Dakhil, the company’s executive vice president.
Earlier the price was set at SR230 per share including premium. A single buyer can purchase a maximum of 25,000 shares and a minimum of 50 shares.
The floatation, worth SR1.104 billion, will 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.
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 Financial Group, expects a large demand for SRMG shares in view of the group’s track record, position as a leading publishing organization in the region and its robust performance.