Saudi Arabai’s Marafiq aims to raise $897m in share sale

The state-backed utility has set the offer price at between $10.9 and $12.26 per share

Marafiq provides utility services in a number of industrial cities in Saudi Arabia, including Yanbu, Jeddah, Jubail, Ras Al Khair and Jazan. Photo: Marafiq

Saudi-based Power and Water Utility Company for Jubail and Yanbu aims to raise as much as $897 million through its listing on the Tadawul stock exchange, as appetite for initial public offerings in the region continues to gather momentum.

The state-backed utility, better known as Marafiq, plans to sell more than 73 million shares and has set the offer share price between 41 Saudi riyals ($10.90) and 46 riyals per share, implying an equity value of $2.73 billion to $3.1bn, the company said in a statement on Sunday.

Marafiq provides utility services in a number of industrial cities across the kingdom, including Yanbu, Jeddah, Jubail, Ras Al Khair and Jazan. It reported net income of 665m riyals and revenue of 6.2bn riyals last year.

The company has an “experienced management team and a strong board of directors and supportive shareholders” to drive the growth of the company, it said on Sunday, and a “well-maintained, capital-efficient asset base with extensive in-house asset management capabilities”.

Book-building for Marafiq’s IPO opens on Sunday and will end on October 14, while the subscription period for retail investors will run from October 26 to 29. It did not say when trading of the company would begin on the Saudi stock exchange.

The latest announcement comes as the number of listings continued to rise in the Mena region as economies recover from the Covid-19 pandemic.

Mena recorded a 500 per cent annual increase in the number of listings during the first six months of this year, with 24 IPOs raising $13.5bn, according to an EY report on Mena IPOs. In the second quarter of 2022, nine IPOs raised about $9bn.

The UAE was the biggest IPO market in terms of the aggregate value of deals, while Saudi Arabia led volume with five IPO deals in the first six months of the year, according to the EY data.

Khalid Al Salem, chairman of Marafiq. Handout

Among its shareholders, Marafiq counts the kingdom’s sovereign investment fund, the Public Investment Fund, as well as the Royal Commission for Jubail and Yanbu, Saudi Aramco subsidiary Aramco Power Company and the Saudi Basic Industries Corporation (Sabic).

The company serves 15,147 residential and commercial customers as well as 4,132 industrial and government customers with 4.8 gigawatts of gross power generation capacity and 1.3 million cubic metres per day of desalinated water production capacity.

It is the sole water provider in Jubail and the sole water and power provider in Yanbu, both located in the western part of the country.

HSBC Saudi Arabia and Riyad Capital are joint financial advisers, bookrunners, joint global co-ordinators and underwriters on the deal.

Al Rajhi Bank, Banque Saudi Fransi, Riyad Bank, Saudi British Bank and Saudi National Bank have been appointed as receiving agents.

Marafiq’s IPO is the largest in the kingdom since pharmacy chain Nahdi Medical raised $1.4bn, according to Bloomberg.