Saudi Arabia's BinDawood grocery retailer to raise as much as $585m from IPO

The company set a price range of 84 riyals to 96 riyals per share for the book-build IPO that starts on September 13

Bin Dawood Holding has 73 stores of which 51 are hypermarkets and 22 are supermarkets. Courtesy of BinDawood Holding

Saudi Arabia's grocery retailer BinDawood Holding Company set a price range of 84 riyals to 96 riyals (Dh82.2-Dh94) per share for its initial public offering on the Saudi Stock Exchange.

The kingdom's third-biggest grocery retailer, which announced its listing plans last month, may raise as much as $585 million (Dh2.14 billion) from the share sale that starts on September 13, the company said in a statement. Its existing shareholders will sell 22.86 million shares, for about 20 per cent of the total.

The share pricing for the offering indicates a company valuation of 9.6 billion riyals to 11 billion riyals.

The company is forging ahead with plans for an IPO, capitalising on a surge in demand for online shopping during the Covid-19 pandemic. The offering comes as the kingdom sees more company listings on the Tadawul this year including healthcare group Dr Sulaiman Al Habib Medical Services Company and mortgage lender Amlak International for Real Estate Finance.

BinDawood Holding's bidding and book-building period for institutional investors will start on September 13, the company said. The final offer price and provisional allocation of offer shares to investors will be announced on September 22.

Initially, all the offered shares will be provisionally allocated to institutional investors but may be later reduced to 90 per cent, depending on demand by individual investors, the company said.

The subscription period for retail investors, based on the final offer price, will begin on September 27 followed by the final allotment of offer shares on October 1.

The date for the start of trading will follow after all the relevant legal requirements and procedures are completed, the company said.

The grocery retailer appointed Goldman Sachs and JP Morgan as financial advisers, co-ordinators, bookrunners and underwriters on the IPO. GIB Capital and NCB Capital are also among the bookrunners. The National Commercial Bank and Al Rajhi Bank are receiving agents.

BinDawood Holding has 73 stores of which 51 are hypermarkets and 22 are supermarkets, making it the third-largest grocery retail operator in Saudi Arabia by revenue as of December 31, 2019.

It operates mass, mid-market supermarket chain BinDawood and high-end grocery brand Danube.

Its first-half net income increased 82 per cent year-on-year, while revenue rose 22 per cent from the year-earlier period.

Significant shareholders in the company include the BinDawood family and Bahrain-based Investcorp, which acquired a stake in 2015.

Globally, the Covid-19 pandemic has caused a "significant slowdown" in activity in international IPO markets, according to the consultancy EY. The number of IPOs fell as much as 39 per cent in the second quarter to 186 listings, compared to 306 in the same period last year.

However, there were "clear signs" of recovery in June in global IPO markets, with investor demand focusing on technology, pharmaceutical and biotech businesses.

In the Middle East and North Africa (Mena), IPO activity was 11 per cent less by volume and 43 per cent lower by proceeds in the first half of the year. That was largely due to a drop in oil prices and the impact of the pandemic on companies' financial performance, EY said.

"In Mena, we expect investor sentiment to remain cautious in the second half of 2020 and IPO markets to take their time rebounding," the report said.