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May 22, 2019

Saudi mall operator is first IPO to allow US investment

Third-largest IPO in five years sees US investors take advantage of qualified foreign investor rules for first time

One of the largest IPOs to come out of Saudi Arabia in the past five years has seen mall operator Arabian Centres become the first to allow US investment under new rules introduced in 2015. 

Talked up as possibly the largest IPO to come out of the kingdom since 2014, Arabian Centres debuted at SR26 riyals ($6.93) on the Saudi stock exchange, the Tadawul. This was at the bottom end of its indicative range of SR26-SR33. The Riyadh-headquartered company had been looking to raise SR2.8 bn.

This makes it the third-largest Saudi IPO since Saudi bank National Commercial raised $6 bn in 2014, according to Refinitiv data.

But the Arabian Centres listing is also notable for being the first IPO directly available to qualified institutional buyers in the US, taking advantage of new rules launched in 2015 and since eased.

Saudi billionaire Fawaz Alhokair, chairman of Arabian Centres, calls the IPO a ‘major milestone’ for both the company and the kingdom, as it marks ‘the first IPO in Saudi Arabia offered to qualified institutional buyers in the US under Regulation 144A,’ he says in a statement. ‘This is a historic moment for our business and for the country’s capital markets.’

Arabian Centres CEO Olivier Nougarou – who was named as the new chief executive in March, coming from European real estate company Unibail-Rodamco Group – adds that the IPO ‘will enable us to embark on our strategy for future growth, specifically our ambitious expansion plans to develop eight assets and two expansions within the next five years.

‘We believe we are well positioned for the future, considering Saudi Arabia’s ongoing economic reforms and its robust and under-penetrated retail sector, with SR400 bn in retail sales.’

As part of Saudi Arabia’s Vision 2030 plan, which aims to diversify the economy away from a reliance on oil, the country is expanding the entertainment available to citizens in the conservative Islamic kingdom, which lifted a 35-year ban on cinemas in 2018. As part of its expansion plans, Arabian Centres is looking to take advantage of the kingdom’s Vision 2030 goals by using some of the proceeds raised from the IPO to expand its offering of malls and cinemas, while also paying down debt.

Garnet Roach

An award-winning journalist, Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of...