JEDDAH, 10 March 2005 — The initial public offering (IPO) of the Kingdom’s new Islamic bank, Bank Albilad, has generated such tremendous interest that half the population of Saudi Arabia has applied for shares, its Marketing Manager Mohammad Al-Awadh said yesterday.
The scramble for a piece of the 30-million-share cake, the IPO for which closed yesterday, marked a record for subscribers for a new listing in the Kingdom, which is slowly opening up its economy, he said. The IPO is believed to be massively oversubscribed, possibly setting a new record.
“By last night we had 8.3 million applications, more than half of the population,” he said. Awadh said there were signs of a final rush which could push the total close to 9 million.
Abdelmenem Jamil Addas, a professor of finance and marketing at the College of Business Administration, told Arab News: “As the Saudi stock index is already nearing the 9,500 mark, Bank Albilad should make its debut at the stock market at SR800 to SR900 per share. So I expect the investors will sell shares in the beginning and make profits as the bank is not going to declare any dividend in the first year.”
He also said that unless the bank launches new innovative quality products in the market, the shares of the bank will come under pressure afterward as interest rates have already started going up in the United States and consequently bank shares in Saudi Arabia will get hurt the most.
Habib F. Faris, vice president at Clariden, London, who follows the Saudi stock market closely, said that “the response for Albilad IPO shows how much confidence investors have in the banking sector and in the Saudi stock market. Shares in the Kingdom are so lucrative that investors rush to make handsome profits.”
“This is the biggest Saudi IPO in terms of subscribers,” Awadh said. Investors have sought shares worth just over SR7.5 billion ($2 billion), making the 30 million-share offer four times oversubscribed. Shares were priced at SR50. The rate of women’s participation in general was estimated at 6.85 percent.
