JEDDAH, 7 May 2007 — The initial public offering (IPO) of Saudi Kayan Petrochemical Company valued at SR6.75 billion ($1.8 billion) — the second-largest IPO in the Saudi market — is set to end today. The 10-day offer took off slowly on April 28 with a mere SR1.3 million or 18 percent of shares reportedly sold in the first week. However, “it raised SR2.1 billion by the middle of Saturday,” a source said.
Saudi Kayan, which is 35 percent owned by Saudi Basic Industries Corp. (SABIC), won approval earlier to sell 675 million shares at SR10 each. The IPO, equivalent to a 45 percent stake, is open only to Saudis. The maximum subscription is SR200 million.
SABIC is to assist Saudi Kayan in setting up of a nearly SR4 billion petrochemical company in Jubail, expected to be completed in 2009. The company is expected to produce an estimated 5.6 million cubic tons of petrochemicals such as ethylene, propylene and other chemical products. Majority of the petrochemical products are likely to be exported to China and India, in addition to other Asian countries which have been experiencing a booming economy in recent years.
Light activity in the purchase of initial public offerings is expected in the first few days of subscription, Waleed Madani, vice president of Technical Research at Financial Transaction House, told Arab News.
The large investors are typically the ones to purchase in the last days of IPO and I don’t expect Kayan to be any different, he said.
When asked what price he expects Kayan to have when it finally lists on the Tadawul, he said “in my opinion, if it reaches SR13, I think this will be a good outcome due to the massive number of stocks offered for subscription.”
SABB, 40 percent owned by HSBC Holdings, has been named to underwrite SR2billion worth of IPO, with SAMBA assigned as lead underwriters of the project.
Ioannis Karapatkis, managing director of Global Investment Banking Advisory at SABB bank, agreed, saying that “most of the big investors will enter (the market) on the last day but anything is possible in Saudi Arabia, though I’m not sure if it will reach the 10 million subscriptions of King Abdullah Economic City.”