May 7, 2014 / 2:51 PM / 3 years ago

UPDATE 1-Saudi hotel firm wins nod for share listing in May

* Abdul Mohsen al-Hokair Group to float 30 percent of shares

* IPO to have book-building part for institutions, then retail offering

* Saudi wants to diversify bourse away from banks, petrochemicals (Recasts, adds details)

By Matt Smith

DUBAI, May 7 (Reuters) - Saudi Arabia’s market regulator has granted permission for a family-owned hotel and leisure group to launch an share sale this month in a move that will help diversify Riyadh’s bourse.

Abdul Mohsen al-Hokair Group for Tourism and Development Co can sell 30 percent of its shares in an initial public offering (IPO), a stock exchange statement said on Wednesday.

Saudi Arabia’s stock market is the Gulf’s largest and is more diverse than neighbouring exchanges, but petrochemicals and banking dominate Riyadh’s bourse and these two sectors account for 13 of the 20 largest listed stocks.

That has led Saudi authorities to encourage family-owned groups and businesses in other industries to go public.

Abdul Mohsen al-Hokair’s IPO will be divided into two sections and conducted as a book-build offering, meaning the price of the shares will be dictated by demand from investors instead of fixed at the start of the process.

The first section will be for mutual funds and “authorised persons”, after which the price of shares will be set. A second period for retail investors to subscribe to shares will run from May 28 to June 3, the statement added.

Abdul Mohsen al-Hokair, whose hotel operations include Hilton and Holiday Inn hotels in the Middle East, appointed Saudi Fransi Capital, the investment banking arm of Banque Saudi Fransi to arrange the IPO, sources previously told Reuters.

The company is not related to Saudi Arabian retailer Fawaz Abdulaziz Alhokair.

The Saudi bourse attracted five IPOs in 2013 worth around $506 million, down in both volume and value from the previous year despite a 25.5 percent rise in the main market index .

This year promises to be busier, partly because of the finance ministry’s plan for an IPO by Saudi Arabia’s largest lender, National Commercial Bank, while the share index hit a six-year high on Sunday. (Reporting by Matt Smith; Editing by David French and Louise Heavens)

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