RIYADH, 26 December 2007 — Saudi Arabia’s Rabigh Refining and Petrochemical Company (PetroRabigh) will sell 219 million shares at SR21 each, representing SR10 par value and SR11 premium, in an initial public offering (IPO) scheduled next month, HSBC Saudi Arabia Limited — the company’s financial advisor and lead manager in the undertaking — said yesterday. It will raise SR4.6 billion ($1.23 billion) from the sale of a 25 percent stake. Fifty percent of the IPO shares will be offered to Saudi individuals and the remaining 50 percent will be offered to selected institutional investors, the bank said in a statement.
However, the lead manager reserves the right to reduce the institutional allocation from 50 percent to 25 percent in the event that retail demand is sufficient and upon approval of the Capital Market Authority, the bank pointed out.
The minimum subscription is 10 shares and the maximum is one million shares, it added.
PetroRabigh, a $10 billion joint venture between Saudi Aramco and Japan’s Sumitomo Chemicals, will raise SR4.6 billion ($1.23 billion) from the sale of a 25 percent stake.
Timothy Gray, chief executive officer of HSBC Saudi Arabia, has confirmed that all receiving banks’ branches will be ready to receive investors’ applications for 219 million shares on Jan. 5 until the last day of subscription on Jan. 12, 2008.
He said that a maximum of SR37.5 million worth of shares will be earmarked to PetroRabigh employees, noting that the allocation to retail subscribers will be performed in two stages: in the first stage, each subscriber will get a minimum of 10 shares. During the second stage, and in the event there is a sufficient demand by retail subscribers, each subscriber for 50 shares or less will get full allocation of what he applied for provided that total shares allocated do not exceed total shares offered to retail subscribers (162,464,286 shares).
The balance of the offered shares (if available) will be allocated on a pro-rata basis, the bank said.
Sumitomo and Saudi Aramco agreed in 2005 to develop the petrochemical complex through a 50-50 joint venture that would upgrade a refinery at Rabigh on the Red Sea coast.
Saudi Aramco will supply PetroRabigh with the feedstock necessary to operate the plant, including ethane, on a long-term, fixed-price basis and will market the refined products produced by PetroRabigh. Sumitomo will provide petrochemical international sales and marketing expertise, as well as technology licensing.
The joint venture is expected to start commercial operations in the fourth quarter of 2008.
The complex will produce 18.4 million tons of oil products, 1.3 million tons of ethylene and 900,000 tons of propylene a year.
Sumitomo and Saudi Aramco will each retain a 37.5 percent stake after the IPO, Sumitomo Chemicals said in a statement in Tokyo.
All Saudi banks will take subscriptions for the IPO to facilitate the participation of all Saudi citizens in the eight-day offering, Gray said.