Alhokair's Arabian Centres to offer IPO on Saudi bourse and raise $1 billion

Arabian Centres owns, operates and develops 19 malls across 10 cities in the kingdom

Visitors look at stock price information displayed on a digital screen inside the Saudi Stock Exchange, also known as the Tadawul, in Riyadh, Saudi Arabia, on Tuesday, April 10, 2018. Foreign investors bought more Saudi stocks in March than ever before in anticipation of the kingdom���s upgrade to emerging-market status. Photographer: Abdulrahman Abdullah/Bloomberg

Arabian Centres Company, the largest shopping mall owner and operator in Saudi Arabia, secured regulatory approval to list on the Tadawul stock exchange, in the kingdom's biggest initial public offering in five years, which could raise $1 billion (Dh3.67bn).

“We are laying the groundwork for the next chapter of our growth story and offering investors – both domestic and international – the opportunity to invest in a dynamic company and industry well positioned to benefit from the longer term structural growth path within the kingdom’s retail sector,” said Fawaz Alhokair, chairman of Arabian Centres, in a statement on Tuesday.

Saudi Arabia's Capital Market Authority approved Arabian Centre's application to offer 95 million shares, or 20 per cent of its share capital as of Monday, comprising a combination of existing and newly issued shares. The net proceeds from the IPO will be used to reduce debt and – if there is any surplus – for general corporate purposes.

“Subsequently, the company believes it will be in a prime position to achieve its growth plans, as set out in the prospectus to be published in due course in connection with the offering,” it added.

Arabian Centres owns, operates and develops 19 malls across 10 cities in Saudi Arabia, and has a 14 per cent market share across the kingdom’s four major cities, according to property consultancy JLL.

The company posted revenue of $576 million in 2018 — up from $511m in 2016. Its future plans include opening four more malls and one mall extension in the next 12 months, it said on Tuesday.

The 17-year-old company is owned by Fawaz Alhokair Group, in which Saudi billionaire Mr Alhokair is the majority shareholder. The group has been planning an IPO of Arabian Centres since 2014, when it hoped to raise $2bn from a 30 per cent sale. But the plans were delayed in 2015 when regional stock exchanges slumped.

The kingdom is looking to grow its retail and entertainment sector as part of plans to diversify its economy under the Vision 2030 road map and reduce dependence on oil revenues. Arabian Centre said the company is "well positioned to capture the benefits of the expected transformational shift".

“We have a clear plan for our business to unlock further value from our current portfolio, enhance our lifestyle and brand offering, and maintain our leadership through developing a focused and superior pipeline,” said Olivier Nougarou, chief executive of Arabian Centres.

Moelis & Co, Morgan Stanley, Samba Financial Group and NCB Capital are advising on the IPO, according to Bloomberg.