Riyad, 16 January 2024 (TDI): Saudi Arabia’s Fourth Milling Co. has chosen Riyad Capital to facilitate its initial public offering, as per sources familiar with the situation.
The share sale may occur in H1 this year, an anonymous source revealed. The company enlisted Himmah Capital for advice on the offering, potentially raising over $200 million, as reported in October.
Moreover, the specifics of the share sale, such as its size and timing, are still in the early stages and may undergo adjustments, according to sources familiar with the matter.
Efforts to reach representatives for Fourth Milling Co. and Riyad Capital for comments have been unsuccessful.
In recent years, Saudi Arabia restructured the government-controlled flour milling industry, dividing it into four companies subsequently privatized. Fourth Milling, part of this initiative, was sold in 2021 to a consortium comprising Allana International, Abdullah Al Othaim Markets, and United Feed Manufacturing Co. The acquisition amounted to 859 million riyals ($229 million).
Moreover, Abdullah Al Othaim Markets said earlier this month that Fourth Milling had named a financial adviser for its IPO, without naming the institution.
The milling companies are at different listing stages. First Milling Co. pioneered with a $266 million IPO in May. Also, Modern Mills for Food Products Co., formerly Milling Co. 3, gained approval from the Saudi market regulator on Dec. 31 to list a 30% stake on the bourse.
However, the company has enlisted Emirates NBD Capital to join the existing banks involved in its IPO. Sources familiar with the matter suggest the IPO might be launched as early as the first quarter of this year.
Saudi Arabia’s endeavor to privatize certain industries is integral to its ambitious Vision 2030 plan, aiming to reduce reliance on oil sales in the economy. As a strategic component of this vision, the sovereign wealth fund has generated substantial funds by divesting stakes in various companies, supporting the transition process.
Saudi Vision 2030, initiated in 2016, aims to diversify Saudi Arabia’s economy and reduce dependence on oil revenues. The comprehensive plan outlines a roadmap for sustainable development, aligning with global economic trends and technological advancements. By fostering diversification and embracing innovation, the vision seeks to ensure long-term growth and economic resilience. The ultimate goal is to transform the kingdom into a more dynamic and sustainable global player.
Vision 2030 aims to boost economic prosperity and job creation by enhancing various sectors. A key strategy involves diversifying the economy through investments in non-oil sectors like tourism, entertainment, healthcare, and technology. This approach seeks to establish new revenue streams, reducing the Saudi economy’s susceptibility to fluctuations in oil prices.
Vision 2030 places a strong emphasis on cultivating a robust private sector. Initiatives are in place to promote entrepreneurship, attract foreign investment, and support the expansion of small and medium-sized enterprises.
Furthermore, Vision 2030 extends its focus to uplift the quality of life for Saudi citizens on the societal front. The plan incorporates initiatives to elevate education, healthcare, and infrastructure, placing a special emphasis on utilizing technology for smart city development and sustainable progress. Social and cultural reforms are integral to the vision, aiming to cultivate a more open and tolerant society for the well-being of the population.
Additionally, The Saudi government has established the Public Investment Fund (PIF) as a vital financial driver to support transformative efforts outlined in Vision 2030. The PIF plays a crucial role in funding projects, acquiring strategic stakes in companies, and supporting economic diversification.
As Saudi Arabia advances towards 2030, Vision 2030 represents a bold blueprint for economic and societal transformation, reflecting the country’s dedication to a sustainable and prosperous future, free from dependence on oil.