JEDDAH, 22 July 2006 — The Emaar Economic City (EEC) set to begin its initial public offering (IPO) to raise 30 percent of its share capital from today.
The IPO, which was approved by the Saudi Capital Market Authority (CMA), will remain open for subscription for 10 days until Aug. 2.
The share capital of EEC is SR8.5 billion ($2.27 billion) consisting of 850 million shares with a nominal value of SR10 each. EEC will be offering 30 percent of this equity — 255 million shares — through the IPO at a nominal face value of SR10 each thereby raising a total of SR2.55 billion. EEC IPO will be the first Greenfield IPO fully underwritten in Saudi Arabia.
Net proceeds from the offering will be used by the EEC to finance its real estate development operations. Approved by the Ministry of Commerce & Industry, EEC is developing the single largest private sector initiative in Saudi Arabia — the SR100 billion King Abdullah Economic City (KAEC). Saudi Arabian General Investment Authority (SAGIA) is the prime facilitator of KAEC.
“Encouraged by governmental incentives and economic reforms, investor confidence is surging in the Kingdom,” EEC Chief Executive Officer Nidal Jamjoom said. “We are thankful to CMA for the swift approval for the IPO, and expect huge investor response.”
Potential investors can obtain the IPO prospectus, and the subscription application forms from SABB, the National Commercial Bank, Bank Albilad, Bank AlJazira, Riyad Bank, Banque Saudi Fransi, the Saudi Hollandi Bank, The Saudi Investment Bank, Arab National Bank, Al-Rajhi Bank and Samba Financial Group.
“To have the Kingdom’s top-most banks participating in our IPO is a reiteration of the trust in the potential offered by KAEC, which will expand the economy, catalyze foreign investment inflow, and boost commerce and industry,” Jamjoom said. “Their involvement also underscores a new market dynamic of competition, where various players from the same sector work toward a common goal - the welfare of the society.”
The IPO is fully underwritten with SABB acting as lead underwriters and Riyad Bank and NCB acting as sub-underwriters. HSBC is also the exclusive financial adviser on the IPO with SABB appointed as lead manager. KPMG Al-Fozan & Bannaga are the registered auditors and reporting accountants while Baker & McKenzie are the legal advisers.
The lead manager and selling agents will commence receiving subscription application forms at their branches throughout Saudi Arabia. Subscriptions for less than 50 offer shares or fractional numbers will not be accepted. In addition, each subscriber may not apply for more than 25,000 offer shares.
An application has been made to the CMA for the admission of the shares to its official list and all relevant approvals required to conduct the offering have been granted. Trading is expected to commence on the Saudi Stock Exchange (Tadawul) soon after formalities have been completed.
“The King Abdullah Economic City, the first fully private sector funded economic zone and the single largest private sector investment in the Kingdom, has the potential to attract increased foreign investment through its comprehensive development plan,” EEC Chairman Mohamed Ali Alabbar said. “The six key components — seaport, industrial district, education and healthcare zone, financial island, resorts and the residential area — of the project are all geared to generate more employment opportunities for Saudi nationals, build the Kingdom’s infrastructure and facilitate sustained investor interest.”