The IPO gained approval from the Capital Market Authority (CMA) on Sunday and will offer 22.5 million units at SR10 each. The fund is a close-ended fund with a term of three years, which can be extended to 5 years, according to KSB deputy-CEO and head of asset management Ibrahim Al-Alwan.
“We have completed many studies on the Real Estate market in Riyadh and have seen a gap in supply versus demand. Therefore, we see this as a great opportunity for investors to expand their portfolio due to the present huge growth of the Saudi real estate market, Al-Alwan told Arab News.
Often times, he added, many investors do not have a chance to directly invest in the local real estate market and by providing the fund IPO, KSB has made it easier to invest with a manager who will oversee the fund and distribute the liquidity to the investors at the end of the term.
“This is the fifth real estate investment fund launched by KSB in the last four years and we expect the same success with this fund as the last four,” Al-Alwan said.
He said 20 percent of the fund will be covered by related companies and the fund manager while 80 percent of the fund is being floated to the public.
“We expect the investment return on the real estate fund to be about 10-15 percent annually, which makes the investment very attractive,” Al-Alwan added.
Concerning the project in Riyadh that the fund will finance, the deputy CEO said it would be a closed residential luxury compound in the northeast of Riyadh to be built on 66,000 square feet of land, which will consist of 180 villas and 112 apartments including amenities such as private swimming pools and gyms.
“We have awarded the development contract to Saudi Urban Development Company and already have the necessary license to begin construction,” Al-Alwan said, adding that currently the fund is being audited by PriceWaterHouse with Jones Lang Lasalle acting as consultants and financial advisers for the project and Century 21 as project evaluators.
The KSB City Fund IPO is expected to remain open till June 9.
