SAUDI ARABIA – Arabian Mills for Food Products Co’s initial public offering (IPO) in Saudi Arabia has garnered significant attention, with the offering fully subscribed within just an hour of the book-building process opening.
This comes after the company announced plans to sell a 30% stake through an initial public offering (IPO) in Riyadh in August, becoming the third flour milling company in Saudi Arabia to go public.
The Capital Market Authority approved the offering in June 2024, marking another milestone in the ongoing privatization of the kingdom’s flour milling industry.
The company seeks to raise up to US$271 million by offering a 30% stake, which equates to around 15.4 million shares on the Saudi stock exchange.
According to local news, institutional investors rapidly covered the shares, which are priced between 62 and 66 Saudi riyals each (US$16.50 to US$17.60) during the initial phase.
The company attributes the rapid oversubscription to strong investor confidence in the company’s growth prospects, given the increasing demand for food products in the region, driven by population growth and changing consumer preferences.
The IPO’s book-building period runs from September 1 to September 5, with the final pricing expected to be set on September 11.
A retail subscription period will follow on September 18 and 19. This rapid subscription rate mirrors the recent success of Saudi perfume manufacturer Al Majed for Oud Co., which also saw strong investor demand during its IPO.
Arabian Mills, a major player in Saudi Arabia’s food processing sector, has positioned itself to capitalize on the Kingdom’s growing focus on expanding and diversifying its industrial base under the Saudi Vision 2030.
Formerly known as the Second Mills Company, the Arabian Mills Company operates three mills located in Riyadh, Jazan, and Hail, with a combined production capacity of approximately 4,920 tons of flour per day.
The company’s move to go public comes amid a broader trend of increased investor interest in the Saudi market, particularly following its inclusion in major global indices and the Kingdom’s ongoing efforts to attract foreign investment.
Additionally, the IPO is expected to support Arabian Mills in expanding its operations both domestically and internationally, leveraging the current momentum in the Saudi food and beverage sector.
Arabian Mills’ decision to go public aligns with Saudi Arabia’s strategic initiatives to diversify its economy beyond oil, as highlighted by other recent developments, such as the automotive sector’s push for innovation and eco-friendly solutions and the burgeoning fintech market, which has seen significant venture capital inflows since 2018.
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