Saudi retailer Fawaz Alhokair expects to raise 3.1 billion riyals in an IPO

Saudi retailer Fawaz Alhokair Group is seeking to raise as much as 3.1 billion Saudi riyals (Dh3.07bn) from selling shares in its malls unit, the company said on Sunday. It will be the country’s largest initial public offering since lender National Commercial Bank raised $6bn in 2014.

The group secured regulatory approval to list on the Tadawul stock exchange earlier this month.

Arabian Centres, which owns the franchise for brands such as Banana Republic and Zara, set the price range of the IPO at 26 riyals to 33 riyals, valuing the company at as much as 15.7bn riyals.

Saudi share sales slowed as the kingdom’s economy grappled with lower oil prices. Listings by companies and real estate investment trusts raised almost $900 million last year, down from $6.7bn in 2014, according to data compiled by Bloomberg.

Riyadh has been encouraging more family owned companies to list in a bid to strengthen its capital markets as part of reforms aimed at reducing reliance on oil revenue, according to Reuters. Samba Capital, Morgan Stanley, NCB Capital, Goldman Sachs, Citigroup, Credit Suisse, EFG Hermes, Emirates NBD Capital KSA and Natixis are managing the IPO.

The offering includes a total of 95 million shares, comprising 65 million existing shares to be sold by shareholders and 30 million new shares to be issued by the company by way of a capital increase.

The announcement of final offer shares allotment and refund of excess subscription is due on May 14. Arabian Centres owns 19 malls, making it the leading owner and operator of shopping malls in Saudi Arabia by total gross leasable area as of December 31, 2018, the IPO prospectus said.

Gross proceeds from the sale of new shares would be used for debt repayment, the document said.

Store-based retailing still dominates the Saudi market, contributing 97 per cent of total retail in 2018, according to a market study cited in the prospectus.

Arabian Centres plans to expand its operations to 27 malls within four years, including four in the next 12 months, its chief executive Olivier Nougarou said.

Four cinemas are already under construction, with 12 more to come over the next two years, he added.