Fawaz Abdulaziz Alhokair & Company today announced that it has received very strong response to its IPO which is currently underway.
The ten-day IPO which opened on Saturday 7th of October received 358789 subscribers at the end of third day. A total of SR 429,833,800 has been collected within the first three days of the IPO.
Dr. Abdulmajeed Alhokair, Chief Executive Officer, Fawaz Abdulaziz Alhokair & Company said: “We thank Saudi investors for showing their confidence in Fawaz Abdulaziz Alhokair & Company. Their overwhelming response to the IPO is an indication of their trust in the Company, its future growth potential and market leadership status.”
Earlier a group of Muslim scholars joined revered Prof. Shaikh Abdulla Al Mutlaq, member of the supreme committee of Islamic scholars in KSA, in issuing a FATWA and sanctioning the IPO and trading of Fawaz Abdulaziz Alhokair & Company shares in the market. Prof. Al Mutlaq had asserted that all operations of the Company are Shariah compliant.
Shaik Mohammed Alqerri, Shaikh khalid Aldaeiji, Prof. Shaikh Mohammed Aloussaimi, Prof. Shaikh Yousef Alshubeili, Prof Shaikh Abdulaziz bin fawzan AlFawzan have joined Prof Mutlaq in proclaiming Fawaz Abdulaziz Alhokair & Company ‘Naqia”.
Ioannis Karapatakis, Managing Director Global Investment Banking Advisory of HSBC Saudi Arabia Limited said: “The phenomenal response to Fawaz Abdulaziz Alhokair & Company IPO proves that companies with sound fundamentals will continue to enjoy the confidence of investors. Potential investors clearly see the value in being part of a growth story.”
“Investors seem to appreciate the fact that the IPO is priced at 14.6 times price to earnings ratio (based on 31 March 2006 results) compared to the market, which is trading around 23 times. Although this suggest that the IPO is priced at a discount, the Company continues to grow its business by expanding its retail store network throughout the Kingdom and translating this into revenue and cash.”
Addressing recent reports that the Company is taking public only the profitable brands, Karapatakis dismissed it and explained that the retail fashion operations form part of the IPO irrespective of performance. He said: “In order to separate non-IPO retail fashion operations, the Company had to conduct a restructuring exercise, which is normal and in line with best practices. The IPO company has fully audited and independent financial statements and is Shariah-compliant.”
Karapatakis also said that retail fashion businesses do not require heavy equity capital. Fawaz Abdulaziz Alhokair & Company is not an industrial or a petrochemical company that requires massive equity or cash injection to built plants. In retail, customers walk into the stores and pay cash or using their credit cards to buy clothes and other fashion items. Cash is then invested either to open new stores or pay dividends to investors.
The Company is offering 30% of its share capital – 12 million ordinary shares – through the IPO. The IPO is open for subscription for 10 days from Saturday October 7th to Monday October 16th, 2006. The minimum number of shares that an individual investor can subscribe is 10 shares and a maximum of 25000 shares.
For the fiscal year ended March 2006, Fawaz Abdulaziz Alhokair & Company had sales of SR1.3 billion, showing growth of 30% as compared to 2004/05. For the six months ended 30th September 3006 the Company reported sales turnover of SR 703 million, registering a growth of 20% when compared to the same period of last year.
SABB is the sole underwriter of the IPO and also a selling agent. The other banks that are involved in selling the issue are: Samba Financial Group, Al Rajhi Banking & Investment Corporation, National Commercial Bank, Arab National Bank, The Saudi Investment Bank, Riyad Bank, Banque Saudi Fransi, Bank Al Bilad, Bank Al Jazira and Saudi Hollandi Bank.
HSBC Saudi Arabia Limited is the Financial Adviser and Lead Manager, SABB is the sole underwriter of the IPO, while Deloitte & Touche Bakr Abulkhair & Co are the registered auditors. The legal adviser to the transaction is the Law Office of Mohammed Al-Sheikh.
About Fawaz Abdulaziz Alhokair & Company
Fawaz Abdulaziz Alhokair & Company is one of the fastest growing and dynamic enterprises in the Kingdom of Saudi Arabia employing more than 2500 people. It has a reputation built on innovation and successful fashion retail franchising and trades over 42 brands through a network of 617 stores. In 2005/06 the Company had a turnover of SAR 1.293 billion, served more than 12 million customers and sold over 15 million items. The Company has built its success on forging alliances with the world’s most successful fashion retail brands including: Zara, Massimo Dutti, La Senza, Aldo, Nine West, Promod and Wallis. Its fresh approach to retailing is meeting the needs of a fast-growing and increasingly cosmopolitan Saudi population. The Company’s unique ability to spot trends and identify international brands that appeal most to Saudi consumers has resulted in the perfect meeting of demand and supply.
