Saudi retailer BinDawood to list 20% of company on the kingdom's Tadawul exchange

  • Saudi Arabia leads MENA region IPOs in 2020
  • BinDawood's offering to target 90% institutional investors and 10% retail
  • BinDawood Holding Company operates 73 stores across the BinDawood and Danube supermarket chains and employs more than 10,000 people

Saudi retailer BinDawood Holding announced on Monday its plan to sell 22.86 million shares listing 20% of the company on the kingdom's national stock exchange, the Tadawul.

The share sale of BinDawood's supermarket business will tap mainly local investors but the initial public offering will be filed as a so-called "Regulation S" offering, allowing foreign investors outside the U.S. to take part, as well as overseas subsidiaries of U.S. funds.

"We have seen strong appetite from local investors, and investors from Europe," CEO Ahmad AR. BinDawood told reporters on Monday.  

BinDawood has hired Goldman Sachs, JP Morgan Chase, NCB Capital and GIB to work on the deal, with Moelis & Company acting as an advisor.

BinDawood Holding Company operates 73 stores across the BinDawood and Danube supermarket chains and employs more than 10,000 people. The group operates across major Saudi Arabian cities, including Makkah, Medina, Jeddah, Riyadh, Khobar and Dammam. Danube Online is the country's largest online grocery platform, with 3 million users.

Saudi Arabia's economy, hit hard by falling oil prices, is projected to shrink by 6.8% in 2020 but rebound to 3.1% growth in 2021 according to the IMF. Despite rising inflation and a VAT that's tripled to 15% this year, BinDawood have been benefactors of increased demand for online delivery during the pandemic. The company's revenue for the first half of 2020 is up 22%. 

"Definitely (with the) oil price, there are ups and downs" the CEO Ahmad AR. BinDawood told CNBC in a press call on Monday. "The sector we are performing in has proven resilience even in the worst time of the year."

"They have room to grow in mid-level to up-level segments, retail business has room to grow its market share and the unorganized market is relatively big in Saudi Arabia," Mazen Al-Sudairi, head of research at Saudi-based Al Rajhi Capital told CNBC. The retailer has opened four new stores in the first half of 2020 and is planning on one more this year.

Saudia Arabia's IPO activity

Saudi Arabia continues to lead IPO activity in the MENA region according to data from EY, with the region seeing four IPOs raise $814.2 million in the first quarter of 2020. 

Saudi Aramco raised $25.6 billion in its December IPO, initially selling 3 billion shares, and the company exercised a "greenshoe option" which raised the size of IPO to $29.4 billion. Hospital operator Dr Sulaiman Al Habib Medical Services Group raised $701 million in a February offering.

Despite economic conditions, Al-Sudairi believes it's the right time to list for BinDawood. "It pertains to the business segment, it is the right time to IPO for grocery, healthcare, e-commerce," he said. 

BinDawood's IPO follows mortgage lender Amlak International which went on sale to the Saudi public in July. Saudi Arabia is encouraging family-owned companies to list in a bid to deepen the local market's liquidity.

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