SAUDI ARABIA – Arabian Mills for Food Products Co., a leading wheat flour producer in Saudi Arabia, has successfully concluded the individual investor phase of its initial public offering (IPO), marking a significant milestone in its journey towards becoming a publicly traded company.
The IPO process began with approval from the Capital Market Authority (CMA) in June 2024 and has attracted considerable interest from institutional and retail investors.
The individual investor tranche allocated 1,539,450 shares, representing 10% of the total offer.
This segment saw a remarkable response, with 264,179 individual investors placing orders totalling SAR 930.6 million (approximately US$248.1 million).
The subscription coverage reached an impressive 9.2 times the number of shares offered in this tranche, indicating strong market demand.
Each investor was guaranteed a minimum allocation of five shares, while additional shares were distributed pro-rata according to demand, resulting in an average allocation factor of 1.7102%.
Upon listing, the final offer price was set at SAR 66 per share, establishing a market capitalization of SAR 3.387 billion (US$903 million).
The total size of the offering amounts to SAR 1.016 billion (US$271 million). After completing the necessary IPO and listing procedures with the CMA and Saudi Exchange, the shares will be listed on the Main Market, although the exact trading date is yet to be announced.
Rohit Chugh, CEO of Arabian Mills, expressed optimism regarding the IPO’s timing and potential benefits for investors. “We feel that the demand indicates this is the right time for any kind of an IPO. The macro-environment has been very favorable in general,” he stated.
He further emphasised that shareholders remain committed to the company’s long-term vision and growth strategy by retaining 70% of their shares post-IPO.
Arabian Mills operates primarily within Saudi Arabia’s staple consumer industry, producing and distributing wheat flour and animal feed.
It is prominent in the Gulf Cooperation Council (GCC) region, with a daily flour production capacity of 4,920 tonnes and a feed milling capacity of 600 tonnes.
Chugh noted that while there are no immediate plans for international expansion due to the current focus on local markets and subsidised pricing arrangements with the General Food Security Authority, future export opportunities may be explored as conditions evolve.
The institutional offering preceding this phase was met with overwhelming enthusiasm, being oversubscribed approximately 132 times.
This robust demand allowed Arabian Mills to set its final offer price at the top of its previously announced range between SAR 62 (US$16.53) and SAR 66(US$17.60) per share.
Chugh explained that this strategic pricing was intended to attract new investors while ensuring the potential for capital appreciation: “We could have set a higher price but chose a lower cost to invite new investors who would join us on our growth journey.”
As Arabian Mills prepares for its next steps post-IPO, it remains focused on enhancing operational efficiencies and expanding its distribution capabilities within Saudi Arabia.
The company aims to uphold high transparency and corporate governance standards as it transitions into public ownership, fostering stakeholder trust.
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