RIYADH, 11 October 2006 — Fawaz Abdulaziz Alhokair & Company said yesterday that it had received a very strong response to its initial public offering (IPO), which is currently under way.
The 10-day IPO, which opened on Saturday, received 358,789 subscribers at the end of the third day. A total of SR 429,833,800 has been collected within the first three days of the IPO.
Dr. Abdul Majeed Alhokair, chief executive officer, Fawaz Abdulaziz Alhokair & Company, said: “We thank Saudi investors for showing their confidence in Fawaz Abdulaziz Alhokair & Company. Their overwhelming response to the IPO is an indication of their trust in the company, its future growth potential and market leadership status.”
Earlier a group of Muslim scholars joined revered Professor Shaikh Abdulla Al Mutlaq, member of the supreme committee of Islamic scholars in the Kingdom, in issuing a fatwa and sanctioning the IPO and trading of Fawaz Abdulaziz Alhokair & Company shares in the market. Professor Al-Mutlaq had asserted that all operations of the company were Shariah compliant.
Ioannis Karapatakis, managing director, global investment banking advisory, HSBC Saudi Arabia Ltd., said: “The phenomenal response to Fawaz Abdulaziz Alhokair & Company IPO proves that companies with sound fundamentals will continue to enjoy the confidence of investors. Potential investors clearly see the value in being part of a growth story.”
“Investors seem to appreciate the fact that the IPO is priced at 14.6 times price to earnings ratio (based on March 31, 2006 results) compared to the market, which is trading around 23 times. Although this suggests that the IPO is priced at a discount, the company continues to grow its business by expanding its retail store network throughout the Kingdom and translating this into revenue and cash.”
He said: “In order to separate non-IPO retail fashion operations, the company had to conduct a restructuring exercise, which is normal and in line with best practices. The IPO company has fully audited and independent financial statements and is Shariah-compliant.”
Karapatakis also said that retail fashion businesses do not require heavy equity capital.
The company is offering 30 percent of its share capital - 12 million ordinary shares - through the IPO. The IPO opened for subscription on Saturday and will continue up to Oct. 16. The minimum number of shares that an individual investor can subscribe is 10 shares and a maximum of 25,000 shares.
