Investcorp exits investment in retail chain BinDawood through its listing

Bin Dawood Holding has 73 stores of which 51 are hypermarkets and 22 are supermarkets. Courtesy of BinDawood Holding

Bahrain-based Investcorp said on Wednesday it exited its investment in BinDawood Holding through the Saudi Arabian retailer's initial public offering.

The deal marks Investcorp's third public share sale in the kingdom over the past four years. The asset management firm has previously listed jewellery company L'Azurde in 2016 and Leejam Sports Company (Fitness Time) in 2018.

BinDawood Holding, the kingdom's third-largest grocer by revenue, began trading on Tadawul, the kingdom's stock exchange, on Wednesday after listing 20 per cent of its shares. Investcorp acquired a minority stake in hypermarket-operator in 2016.

"Investcorp representatives shall remain on our board following the listing, which will provide the company with the advantage of continuing stability and stewardship as we accelerate our growth strategy to become the leading supermarket operator in the Kingdom of Saudi Arabia,” Ahmad BinDawood, chief executive of BinDawood Holding, said.

BinDawood Holding has 73 stores, of which 51 are hypermarkets and 22 are supermarkets. It operates mass, mid-market supermarket chain BinDawood and high-end grocery brand Danube.

In a note to clients on Wednesday, Al Rajhi Capital Research said it favoured the company for its "strong earnings profile, return metrics, and overall positioning in the market".

It added that the kingdom's grocery retailing market has been undergoing consolidation over the past three years, which is expected to expand the market share of organised retail players to 48 per cent in 2024 from 41 per cent in 2019.

"This creates a strong opportunity for companies like BinDawood to gain market share from the smaller players," Al Rajhi said.

"We have assumed three-store expansion per year from 2021-2024 and expect e-commerce to drive the like-for-like growth, especially in the Danube segment. This should also support the gross margins going forward. Accordingly, we expect the company’s overall revenue and net profit to grow at a compound annual growth rate of 6 per cent and 14 per cent respectively [in] 2020 [and] 2025."

Aside from BinDawood, Investcorp – which has Abu Dhabi's Mubadala Investment Company as its biggest shareholder – retains stakes in Saudi Arabia's Theeb Rent A Car and Al Borg Medical Laboratories.

"Saudi Arabia is a key market for Investcorp and we believe that the kingdom’s Vision 2030 will unlock significant additional opportunities for our firm and our clients," said Yasser Bajsair, chief executive of Investcorp KSA.