Kingdom commences privatisation plan for flour mills

Saudi Arabia completed the first batch of its flour milling sector privatisation through a full divestment of two of its four milling companies to qualified investors.

The First Milling Company went to Raha AlSafi consortium for 2.02 billion Saudi riyals (Dh1.98bn), whereas the Third Milling Company was awarded to Alrajhi-Ghurair-Masafi consortium for 750 million riyals.

Winning bidders were decided on the basis of the “highest financial bids submitted by qualified strategic investors”, said the National Centre for Privatisation and Saudi Grains Organisation.

The completion of the sale and transfer of ownership are subject to legal requirements by the bidders.

“The successful sale of the milling companies in the first batch reflects the attractiveness of Saudi Arabia’s flour sector to investors … the qualification phase for the second and final stage of the privatisation of flour milling sector will be launched shortly,” NCP and Sago added.

The second phase will include the sale of the second and fourth milling companies.

The four flour-milling companies under Sago represent an “attractive opportunity” for the private sector to invest in one of the largest flour markets in the Mena region with “high growth rates” and potential to enhance “sector productivity”, NCP said.

Sago is the state entity running a portfolio of flour mills and animal feed factories in the kingdom.

Last month, Saudi Arabia issued a resolution giving four milling companies permits to produce flour and transferring their ownership to the NCP. This was in line with NCP’s role to oversee sales of public assets and forge public-private partnerships.

NCP said the transfer of ownership will not affect the privatisation that is expected to be finalised by next year.

The flour-milling sector is among industries including mining, health and education marked by Riyadh for privatisation under the Vision 2030 programme, which aims to diversify the kingdom’s economy and reduce its dependence on oil.

The privatisation of Sago, identified among the first government-controlled enterprises as part of Saudi Arabia’s privatisation programme, received interest from international agricultural companies such as Archer Daniels Midland and Bunge, both based in the US, according to Reuters.