RIYADH, 15 August 2006 — The Red Sea Housing Services Company’s initial public offering was oversubscribed on the second day of its public offering. A total of 213,042 applications for shares were received until noon yesterday according to the company.
As of yesterday, subscribers from all parts of the Kingdom pumped an amount of SR563,355,160 into the company by purchasing nine million of its shares — 30 percent of the total shares.
The subscription period for the offering, which is only open to Saudi nationals, will close on Monday, Aug. 21. Citizens began to flock to nearby branches where they have personal accounts and began filling out necessary papers. Others relied on subscribing via ATM machines or via phone services provided by their local banks.
Many of the citizens who subscribed during first two days feared that if the company was oversubscribed they would end up getting less than four shares per person.
A bank source speaking on condition of anonymity told Al-Eqtisadiah newspaper, a sister publication of Arab News, that the subscription went smoothly in most banks in the Kingdom in the first two days.
“Most of the people who had subscribed were asking how many shares they would receive after the subscription was over,” the source, who works a manager in a local bank, said.
He said that the outcome of the subscription would not affect in any way future subscriptions to other private companies even if some of the money, which was bought as shares was returned to subscribers.
“The market can withstand such subscriptions due to the large liquidity among subscribers,” he said.
He gave the example of how money was returned to subscribers when other private companies were oversubscribed such as Emaar Economic City.
“The money returned to subscribers actually helped by giving them necessary liquidity to subscribe to this company and many others,” he added.
He said that price per share was reduced to SR58 so that the majority of people could subscribe and benefit from the initial public offering including those with limited income.
