Record 10 million Saudis subscribe to SR2.55 billion Emaar the Economic City IPO

Published August 8th, 2006 - 06:02 GMT

An overwhelming 10 million Saudis, approximately half the country’s national population, subscribed to the ten-day initial public offering (IPO) of Emaar the Economic City (EEC), setting a new record in the Kingdom’s capital market history. Oversubscribed by 2.82 times, the SR2.55 billion IPO received 2.8 million applications with the total amount subscribed at SR7.18 billion.

 

In another record of sorts, the IPO fetched the largest ever subscription through automatic teller machines (ATMs) highlighting the trend of Saudi nationals being increasingly tech and online savvy. Over 30 per cent of the total subscriptions were made via ATMs.

 

EEC’s fully underwritten IPO, open only for Saudi nationals, had on offer 255 million shares at a nominal value of SR10 each, proceeds of which will be used towards the development of the King Abdullah Economic City (KAEC).

 

“The overwhelming response to the IPO is a direct result of the successful vision of The Custodian of the Two Holy Mosques King Abdullah bin AbdulAziz AlSaud to transform the economy of the Kingdom to be ready to leverage a host of opportunities aimed at the prosperity of the Saudi citizens,” said EEC Chairman Mohamed Ali Alabbar. “The forward looking policies of the Saudi Government and the Capital Market Authority (CMA) as well as the strong and growing economy of the Kingdom have played a key role in the success of the EEC IPO,” he explained.

 

“The invaluable support provided by Saudi Arabian General Investment Authority (SAGIA) in the creation of the EEC and in making the world-class KAEC project a reality, has strengthened our resolve to move ahead with confidence,” he said.

 

“We are thankful to the large number of Saudi investors for their trust in our company and in the prestigious KAEC project. As a path-breaking initiative, KAEC will usher in a new era of economic prosperity for the Kingdom and play a critical role in the housing, education, health care, financial and economic sectors. Besides, the project will also create over 500,000 employment opportunities for Saudi citizens amongst its various components. The huge response to the IPO is therefore a reiteration of the confidence investors have in the project and the value it brings to the Saudi society,” Mr. Alabbar added.

 

“The emerging investor appetite for sound offers in the stock market, as reflected in the overwhelming response for the EEC IPO, is a signal of confidence by Saudi citizens in the capital market and a new phase of balanced growth that is based on sound fundamentals and the financial performance of companies,” Mr. Alabbar said.

 

“The investor confidence in the EEC IPO adds momentum to the KAEC project, which has already made significant progress with site development work underway on the project’s first boulevard and geotechnical investigations being conducted,” said Mr. Nidal Jamjoom, Chief Executive Officer, EEC.

 

The IPO was fully underwritten with SABB as lead underwriters and Riyad Bank and National Commercial Bank (NCB) acting as sub-underwriters. HSBC is the exclusive financial advisor on the IPO with SABB appointed as lead manager. KPMG Al Fozan & Bannaga are the registered auditors and reporting accountants while Baker & McKenzie are the legal advisors.

 

 

The 11 receiving banks that supported the subscription were: SABB, NCB, Bank Al Bilad, Bank Al Jazira, Riyad Bank, Banque Saudi Fransi, The Saudi Hollandi Bank, The Saudi Investment Bank, Arab National Bank, Al Rajhi Banking & Investment Corporation and Samba Financial Group.

 

Mr. Ioannis Karapatakis, HSBC Managing Director, Global Investment Banking Advisory, said: “The EEC IPO was a trend-setter with investors showing their preference for alternative channels like ATMs, Internet and tele-banking to subscribe to the shares. It is a robust indication that Saudi investor are now more tech-savvy. The IPO marked the first time, anywhere in the world, that a large number of subscriptions were conducted through ATMs.”

 

Mr. Adel Marzook Al-Nasser, Deputy Managing Director, SABB, added: “The EEC IPO has surpassed all subscription records in the Kingdom by attracting 10 million subscribers, which is approximately half the Saudi national population. Of these, over 30 per cent subscribed through ATMs – a very encouraging trend. SABB is proud to have served as the lead manager of this record-breaking IPO. We thank all the receiving banks who worked closely with us on the IPO.”

 

Mr. Al-Nasser said that the final allocation of shares has been approved by the Capital Market Authority of Saudi Arabia as follows:

 

Number of Applicants

Share Allocation

1

25

2

51

3

77

4

102

5

128

6

153

7

179

8

204

9

230

10

255

11

282

12

307

13

333

14

358

15

384

16

409

17

435

18

460

19

486

20

511

21

537

22

562

23

588

24

613

25

639

26

664

27

690

28

715

29

740

30

766

31

791

32

817

33

842

34

868

35

893

36

919

37

944

41

1,046

42

1,072

 

 

EEC is a consortium headed by global real estate major Emaar Properties PJSC and a number of high profile investors from <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Saudi Arabia. Net proceeds from the offering will be used by EEC to finance the SR100 billion (US$26.6 billion) King Abdullah Economic City (KAEC). SAGIA, the body responsible for inward investments, is the prime facilitator of KAEC, the single largest private sector initiative in the Kingdom.

 

King AbdullahEconomicCity, which encompasses over 55 million sq m, will undertake mixed-use developments in its six components: a modern world-class seaport, industrial district, financial island, educational and healthcare zone, resorts and the residential area. The overall project will be completed in stages, with the first batch of commercial houses and residents expected to take possession within 30 to 36 months.

 

 

 

About Emaar the Economic City:

Emaar the Economic City (EEC) is a Saudi joint stock company headed by real estate major Emaar Properties PJSC and a number of high profile investors from Saudi Arabia. Approved for incorporation by the Ministry of Commerce and Industry vide Ministerial Resolution No. 609 dated May 13, 2006, EEC has a share capital of SR8.5 billion consisting of 850 million shares of nominal value SR10 each. Shares worth SR2.55 billion were offered for public subscription.

 

EEC leads the master-planning and development of King Abdullah Economic City (KAEC), a SR100 billion (US$26.6 billion) project, being built on a pristine location off the Red Sea in the north of Jeddah. SAGIA (Saudi Arabian General Investment Authority), the body responsible for inward investments into the Kingdom, is the prime facilitator for KAEC.

 

KAEC, a New Age City being built today for tomorrow’s generation of Saudi citizens, has six components - seaport, industrial district, education and healthcare zone, financial island, resorts and the residential area.

 

The mega-project works closely with the Kingdom’s on-going drive to expand the economy, create employment opportunities for its youthful population and function as a catalyst to attract foreign investment, global trade, commerce and industry. Based on initial forecasts, the project and its several components will create up to 500,000 employment opportunities in the various industries and service-oriented companies that will open in KAEC.

 

 


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