Americana Restaurants plans IPO and dual listing on Tadawul and ADX

Middle East operator of KFC and Pizza Hut is set to sell 2.52 billion shares in the public offering that will begin on November 14

Americana owns the exclusive rights to the KFC and Pizza Hut franchises across the Middle East. Jaime Puebla / The National
Beta V.1.0 - Powered by automated translation

Americana, the largest quick service restaurant operator in the Mena region, plans to sell 30 per cent of its share capital in an initial public offering and dual-list on stock markets in Saudi Arabia and Abu Dhabi.

The operator of Pizza Hut and KFC in the Middle East plans to sell 2.52 billion existing ordinary shares in the company, Americana said on Wednesday.

The public offering is expected to run from November 14 until November 21 for retail investors in the UAE and Saudi Arabia. For institutional investors, it will close on November 22.

The final offering prices will be determined after the book-building process. Americana's shares are expected to start trading on the Tadawul stock exchange and the Abu Dhabi Securities Exchange, the two biggest bourses in the Arab world, “on or around December 6”, the company said.

“A concurrent dual listing on [the] ADX and the Saudi exchange marks a first-of-its-kind transaction for both markets, and no company could be better suited than Americana Restaurants to carry this torch,” said Mohamed Alabbar, chairman of Americana Restaurants.

“With macroeconomic and demographic tailwinds that support our accelerating growth, this is an exciting time to be inviting investors in the UAE, Saudi Arabia and internationally to share in our onward journey of success.”

Saudi Arabia's sovereign wealth fund, the Public Investment Fund, and Mr Alabbar, founder and managing director of Emaar Properties in Dubai, control Americana through their Abu Dhabi Global Market-based investment holding company Adeptio.

The shareholders are selling part of their stake, among other reasons, to “more actively manage and optimise its portfolio of assets”, Americana said.

The offering is also expected to raise the profile of the company with the domestic and international investment community.

Americana is latest among regional companies seeking to raise funds through equity markets amid the IPO boom.

While capital markets in the US and Europe have slumped amid inflation woes and fears of a looming recession, equity markets in the GCC and broader Mena region have had a flurry of listings.

In October, Saudi-based Power and Water Utility Company for Jubail and Yanbu, better known as Marafiq, said it was pushing ahead with plans to list its shares on the Tadawul.

Borouge, the joint venture between Adnoc and Austrian chemicals producer Borealis, raised $2 billion in Abu Dhabi’s biggest listing.

Dubai on Tuesday increased the size of the stake being sold in Emirates Central Cooling Systems Corporation, better known as Empower, through a public offering to 15 per cent, citing strong investor demand and the oversubscription of shares.

Mena companies have raised about $1.5bn in the third quarter of 2022 alone through seven IPOs.

Saudi Arabia and the UAE, the two biggest Arab economies, have led the regional market activity, according to the latest report by global consultancy EY.

KFC is among the brands managed and operated by Americana in the Middle East. Khushnum Bhandari / The National

The number of companies listed on the region's bourses this year has more than tripled to 31. They raised a total of $14.7bn collectively, an increase of 550 per cent from with the same period in 2021, EY said.

Americana intends to maintain a “robust dividend policy” and make a partial dividend distribution of about 75 per cent of its net profit attributable to the parent company for the second half of this year.

It expects to pay the dividend in cash during the first half of next year.

From 2023 onwards, the company intends to adopt an annual dividend distribution policy and plans to distribute a minimum of 50 per cent of its profit in dividend, “with the intention to further distribute any cash not specifically reserved for general corporate purposes, growth investment or mergers and acquisition activity”, it said.

Americana — the largest out-of-home dining operator in 12 countries across Mena and Kazakhstan — recorded a net profit attributable to the parent company of $121 million for the six months to the end of June.

The company's full-year 2021 profit reached $204m, according to the statement.

Revenue for the first six months of this year stood at $1.15bn while its full-year 2021 revenue was $2.1bn.

The company, which previously traded on the Kuwait Stock Exchange, delisted its shares in 2017. Founded in Kuwait in 1964, Americana introduced the concept of fast-food restaurants in the region in 1970.

As of January, the group owned exclusive franchise rights for the management and operation of more than 1,950 restaurants.

It represents leading brands such as KFC, Pizza Hut, Hardee’s, Baskin Robbins, Krispy Kreme, Wimpy and TGI Fridays.

FAB Capital, Goldman Sachs, Morgan Stanley and SNB Capital have been appointed as joint global co-ordinators and financial advisers while HSBC Bank Middle East and EFG Hermes are joint bookrunners and underwriters.

First Abu Dhabi Bank has been appointed as listing adviser in the UAE while SNB Capital is the lead manager in Saudi Arabia.

Updated: November 02, 2022, 9:44 AM