Saudi Arabia’s Biggest IPO Firm Sees Its Shares Slip on Market Debut

Saudi Arabia’s biggest initial public offering (IPO) for the last five years debuted on Wednesday on the country’s Tadawul stock exchange.

However, the shares of the company- Arabian Centers- have dipped below expectations as they traded at 24.34 riyals ($6.49). Arabian Centers is the biggest shopping mall operator in Saudi Arabia and saw its shares debut at 26.1 riyals before slipping.

The stock’s price dropped below the IPO price of 26 riyals per share. The retail giant priced its initial offering at the bottom of the target range that had been set at between 26 and 33 riyals. The company offered 95 million shares and targeted raising 2.8 billion riyals (approximately $747 million).

Arabian Centers’ share sale had been billed as Saudi’s biggest public sale in five years. However, data provided by Refinitiv showed that the firm’s IPO is the third largest in Saudi Arabia since 2014 when the country’s National Commercial bank raised $6 billion.

The IPO brought “a major milestone” as it marked the first time Saudi Arabia had offered access to stocks in a local company to qualified institutional investors in the United States. The shares were offered under Regulation 144A.” 

This law provides for exemption from strict requirements of the Security and Exchange Commission.

According to Oliver Nougarou, the CEO of Arabian Centres, the IPO is vital to the mall operators plans towards future growth, including its expansion efforts that should see it launch eight new assets among other developments in the next five years. Its immediate plans involve setting up four new malls in the next one year.

One other area the retailer hopes to invest in is the cinema industry. Nougarou has said that they are looking to launch 15 cinemas soon, with more lined to aid in future growth.

Arabian Centres operates 19 major shopping malls spread across 10 cities in the country. Founded 17 years ago, the company’s 2018 revenue hit $576 million, up from $511 reported in 2016.