SAUDI ARABIA – Arabian Mills for Food Products Company is set to become the third flour milling company in Saudi Arabia to go public, with plans to sell a 30% stake through an initial public offering (IPO) in Riyadh.
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 decision comes after the Capital Market Authority approved the offering in June 2024, marking another milestone in the ongoing privatisation of the kingdom’s flour milling industry.
The company’s shareholders, including Ajlan & Bros, Sulaiman Abdulaziz Al-Rajhi International Company, and the National Agricultural Development Company (NADEC), are offering 15.4 million shares to investors.
This stake is equivalent to 30% of Arabian Mills’ paid-up capital, reflecting the company’s growth ambitions and the broader economic diversification strategy under Saudi Arabia’s Vision 2030.
Rohit Chugh, CEO of Arabian Mills, expressed confidence in the company’s future.
“The decision to go public is a decisive one toward accelerating our growth trajectory. Since our privatisation in 2021, we have significantly scaled the business, increased profitability margins, and strengthened our market share,” Chugh stated.
“The growing market for flour, feed, and bran in the kingdom presents significant opportunities for Arabian Mills, which plans to leverage these through continuous innovation and quality enhancements,” he added.
Arabian Mills has appointed HSBC Saudi Arabia as the sole financial adviser, global coordinator, and lead manager for the IPO. Additionally, Alrajhi Bank, Saudi Awwal Bank (SAB), and Banque Saudi Fransi will serve as receiving agents for the individual investors’ tranche.
The shares will be offered in two tranches, one for institutional investors and another for retail investors, between September 1 and September 19. The final offer price will be determined after the book-building period.
Founded in 2017 as part of a broader privatisation initiative, Arabian Mills was acquired in 2021 by a consortium comprising Al Othaim Markets, Allana International, and United Feed Manufacturing Company for SAR859 million (US$229 million).
Since then, the company has reported strong financial performance, with revenues reaching SAR862 million in 2023 and a compound annual growth rate (CAGR) of 16% since 2021.
Profits have also grown at a CAGR of 23.2% during the same period, reaching SAR200 million in 2023. The company’s free cash flow generation stood at SAR238 million in 2023, representing a cash conversion rate of 27.5%.
The Saudi flour milling industry has seen increased public market activity, with First Milling Company being the first to go public, raising US$266 million in May 2023, followed by Modern Mills, which raised US$320 million in March.
The MENA region’s IPO activity remained robust in Q2 2024, with 14 IPOs generating US$2.64 billion in proceeds, according to EY, with Saudi Arabia leading the region with 11 public offerings, including five on the Tadawul.
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