Saudi Arabia’s mortgage lender Amlak to start trading on Tadawul from Monday

The company is selling a 30% stake, with the proceeds going to selling shareholders

Sabic reported its a loss in the second quarter on the back of lower selling prices for its products and impairment provisions. Bloomberg

Shares in Saudi Arabia’s mortgage lender Amlak International for Real Estate Finance will start trading on the Tadawul stock exchange on Monday as the company completes its IPO process.

The company is floating 27.18 million shares, or 30 per cent of its total, with an indicative price range set at 15-17 Saudi riyals (Dh14.7-Dh16.6) per share. Proceeds of the offer are being used to repay selling shareholders.

The offer, the first major listing to take place on Tadawul since the coronavirus outbreak, has been significantly oversubscribed, with a total coverage ratio of 7.67x, according to NCB Capital, which is advising on the listing. Demand from institutional investors, to whom 90 per cent of the shares have been allocated, was covered 4.98x, while the retail element was oversubscribed 26.9x.

“We are pleased by the extremely healthy response to our IPO, which is evidence of the long-term view that the investment community has taken towards the Saudi economy and our company," Abdullah Al Sudairy, chief executive of Amlak International, said last week following the closing of its offer to retail investors.

"The attractive fundamentals that exist for our industry remain in place, and we are looking forward to delivering on the expectations of investors, having provided the first-ever opportunity for exposure on Tadawul to the Kingdom’s non-bank real estate financing sector.”

Amlak International was set up in 2007 and is a non-bank lender, mainly of property loans. It is licensed by the Saudi Arabian Monetary Authority to provide Sharia-compliant lending to corporate, high net-worth and individual clients. The company reported revenue of 296 million riyals and pre-tax earnings of 102m riyals in 2019.

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 Saudi Arabia's 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.

Shares in Amlak International's IPO will be allocated on a pro-rata basis to individuals who subscribed to the offer, depending on the size of their request, NCB Capital said.