Saudi Arabia's mortgage lender Amlak International plans IPO

The company plans to raise funds by listing a 30% stake on the Tadawul exchange

Jabal Omar Development listed on Tadawul stock exchange reported loss for the first quarter amid coronavirus pandemic. AFP

Saudi mortgage lender Amlak International for Real Estate Finance is planning to sell shares through an initial public offering.

The company said on Sunday that it would offer 27.2 million shares, representing 30 per cent of its capital.

It did not indicate a price range but said the net proceeds of the offering would be paid to the selling shareholders on a pro-rata basis.

“Our listing on the Tadawul marks a new chapter in the story of the company, and the board has every expectation that management and staff will fulfil the trust that the market places in us,” said Abdullah Al Howaish, chairman of Amlak International.

“We look forward to delivering on the strategic roadmap we have set out for the years ahead.”

The company appointed NCB Capital as the sole financial adviser for the listing.

Amlak International was established in 2007 and licensed by the Saudi Arabian Monetary Authority to provide Sharia-compliant funding solutions to corporate, high net-worth and individual clients.

The company reported a revenue of 296 million riyals (Dh290m) and earnings before tax of 102m riyals at a margin of 34.4 per cent in 2019.

During the first quarter, it posted revenue of 75m riyals and an EBT of 33m riyals at a margin of 44 per cent.

“We are ready to capture a growing number of opportunities, in particular those provided by the positive market dynamics created by the kingdom’s Vision 2030 reform programme,” Abdullah Al Sudairy, chief executive of Amlak International, said.

“Among our most important competitive advantages is our diverse lending portfolio, which covers the full corporate and individual spectrum. This will enable Amlak to build on its strong position in the corporate real estate financing segment, while supporting Saudis in their ambitions to buy and build homes.”

Driven by population growth and a supportive government policy, housing demand in the kingdom is expected to increase to 188,000 units a year until 2021, then to 203,000 a year from 2022 to 2025 and eventually to 219,000 a year from 2026 to 2029, the company said.

The Ministry of Housing intends to disburse 204,000 individual contracts for housing this year, up from 179,217 contracts worth 79 billion riyals in 2019.

The size of the real estate financing market is expected to grow by a compound annual rate of 8.7 per cent to exceed 1 trillion riyals by 2029, the company said.

“Demand for real estate financing is accelerating and our substantial funding base and first-class technology platform put us in a position to increase momentum,” Mr Al Sudairy said.

Amlak has access to a wide and diverse range of funding sources, with 3.5bn riyals in available credit with banks, of which more than 39 per cent has yet to be utilised, it said. As at December 31, 2019, 65 per cent of the company’s funding was through Sharia-compliant debt while the remaining portion was from internal resources.

Unveiled in 2016, Saudi Arabia’s Vision 2030 is an economic overhaul plan to diversify revenue streams, nurture local industries and reduce the country’s dependence on oil. The country is also reforming local laws and regulations to attract more foreign investment.

The value of IPO deals in the Gulf jumped 14-fold year on year in the first quarter as companies focused on listing on local bourses after Saudi Aramco’s record-breaking market debut late last year.

Three IPOs were recorded in the Gulf during the first three months of the year, raising $801.3m (Dh2.94bn), compared to one listing worth $57.6m in the same quarter a year ago, according to the Mena IPO report published last week by consultancy EY.

Two of the three GCC listings were in Saudi Arabia, with the largest being the $700.9m IPO of Dr Sulaiman Al Habib Medical Services Company, a healthcare group operating hospitals, medical centres and pharmacies.