Arabian Centres to raise $747 million after pricing IPO at bottom of range

DUBAI (Reuters) - Saudi mall operator Arabian Centres is set to raise as much as 2.8 billion riyals ($747 million) after pricing its initial public offering (IPO) at the bottom of its indicative range, according to a company document.

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That would make it one of the biggest IPOs in Saudi Arabia since National Commercial Bank raised $6 billion in 2014 and Saudi Ground Services raised $752 million in 2015, Refinitiv data showed.

The company priced its IPO at 26 riyals per share, the document said, confirming an earlier Reuters story, and compared with a price range of 26 to 33 riyals per share for the sale of 95 million shares.

The firm also plans to exercise an over-allotment option, increasing the deal size from 2.47 billion riyals to 2.8 billion riyals, equivalent to a stake of 22.7 percent.

The book-building process garnered an order-book of 3.1 billion riyals from public and private funds, overseas investors and other institutions, the document said.

The offering from Arabian Centres, majority-owned by Fawaz Alhokair Group, will be the first in the kingdom under Rule 144a, which allows the sale of securities primarily to qualified institutional buyers in the United States.

Arabian Centres owns 19 malls, making it the leading owner and operator of shopping malls in Saudi Arabia by total gross leasable area as of the end of 2018, a sale prospectus released on April 28 showed.

Arabian Centres plans to expand its operations to 27 malls within four years, including four in the next 12 months, CEO Olivier Nougarou said this month.

Four cinemas are already under construction, with 12 more to come over the next two years, he added. A decades-long ban on movie theaters was lifted last year.

Gross proceeds from the sale of new shares will be used to repay debt, the document said. The original deal comprised 65 million existing shares being sold by the current shareholders and 30 million new shares, with a listing scheduled for late May.

The Saudi index has gained over 14 percent this year, making it one of the Gulf’s best performing markets in 2019.

The Tadawul, Saudi Arabia’s main stock exchange and the Middle East’s largest bourse, will join MSCI’s emerging market index in May, heightening interest among foreign investors in the Saudi market.

Riyadh has been encouraging more family-owned companies to list in a bid to deepen its capital markets as part of reforms aimed at reducing reliance on oil revenue.

Fawaz Alhokair, a major shareholder in Fawaz Alhokair Group, was detained in an anti-graft probe in which Saudi authorities held dozens of senior officials and businessmen at Riyadh’s Ritz Carlton Hotel in late 2017.

Many, including Alhokair, were released after being cleared or reaching settlements with the government.

Morgan Stanley, Samba Capital, NCB Capital, and Goldman Sachs are the joint financial advisers and bookrunners for the IPO. Other bookrunners include EFG Hermes KSA, Citigroup, Emirates NBD Capital, Credit Suisse, and Natixis.

Reporting by Hadeel Al Sayegh and Saeed Azhar; Editing by Mark Potter