Saudi retail investors start today, July 2, subscribing to around 2.72 million shares of Amlak International for Real Estate Finance at SAR 16 each, after completing the book-building process.
On Dec. 25, 2019, the Capital Market Authority (CMA) approved Amlak’s request to sell 27.18 million shares, or 30% of its capital, in an initial public offering (IPO).
Amlak’s IPO is the second share sale on Tadawul this year after Sulaiman Al Habib Group in February.
Last year, the Saudi market saw 5 IPOs by Saudi Aramco, Maharah Human Resources Co., Arabian Centres Co., Ataa Educational Co., and Al-Moammar Information Systems Co. (MIS).
Amlak’s retail offering will run for 4 days from today, Thursday, July 2 until Sunday, July 5, 2020.
The institutional and investment fund’s book building process was successfully completed with an oversubscription ratio of 500%.
Institutional investors have recently subscribed to 27.18 million shares, or 100% of offered shares.
Key Information:
Amlak International was established as a Saudi closed joint-stock company with SAR 1 billion capital. In 2011, the general assembly decided to cut capital to SAR 900 million through the buyback of 10 million shares and then writing off those shares due to the increase of capital over the company’s needs.
In 2017, shareholders decided to hike capital to SAR 903 million through issuing new shares for employees’ shares scheme followed by another increase in capital to SAR 906 million in 2018, also through issuing new shares for employees’ shares scheme.
The company’s core activity is to provide real estate financing to companies and individuals in accordance with the Companies Law, monitoring the finance companies law and its executive regulations, relevant regulations, rules and instructions issued by the competent authorities.
Amlak operates through 3 branches in Riyadh, Jeddah and Al Khobar to provide real estate financing through 3 products, Murabaha, Ijarah and Ijarah mawsofa fi athemmah.
Amlak International holds 100% stake in Amlak International Real Estate. Its main activities include selling, buying, and leasing real estate and lands for the purpose of maintaining real estate financing sukuk, but the company does not currently carry out any activity and does not have employees. Its activity is limited to Amlak International Real Estate Finance Co. through registering the largest part of the real estate deeds that it funds in its name.
The company also owns 2.38% of the capital of Saudi Financial Lease Contract Registry Company (SIJIL), according to the financial lease system. The company's activity includes the registration of financial lease contracts and any amendments arising under the approval of the Saudi Arabian Monetary Authority (SAMA).
According to the prospectus, the financing portfolio of Amlak International is SAR 3,090.7 million as of December 31, 2018.
Amlak also indicated that it maintains a sufficient credit capacity from banks to finance its future operations with credit limits of more than SAR 3 billion in 2018. The debt ratio to shareholders’ equity (leverage) is 1.77 times in the same period, which enables the company to complete its expansion plans without additional financing from shareholders with the ability to pay dividend at a high rate in previous years.
The real estate financing company said in the prospectus that it mulls the future diversification of financing sources through options to sell financing portfolios in addition to the available options such as issuing sukuk or obtaining syndicated loans.
Company’s Clients:
- Companies: represented by domestic companies and high solvency individuals. The value of financing contracts for this segment ranges from SAR 5 million to SAR 80 million, with a financing period of up to 5 years in most cases.
- Individuals: represented by individual clients, as the company is allowed to finance individuals from citizens and residents after obtaining the necessary approvals from the relevant authorities. The value of financing for this category ranges from SAR 0.3 million to SAR 5 million with an average financing period of 13 years.
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Amlak’s Clients Contracts Ratio by Category as of June 30, 2019 |
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Category |
Ratio (%) |
Number |
|
|
Corporate |
68.8 % |
132 |
|
|
Retail |
31.2 % |
1,104 |
|
|
Total |
100 % |
1,236 |
|
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Company’s Profile |
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Company |
Amlak International for Real Estate Finance |
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Market |
Saudi Stock Exchange (Tadawul) |
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Company core activity |
Real estate financing |
|
Status |
Active |
|
Capital |
SAR 906 mln |
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IPO Summary |
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|
Issue percentage (%) |
30% |
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Number of shares offered to retail investors |
2.72 mln shares, representing 105 of total offered shares of 27.18 mln |
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IPO Price |
SAR 16 per share |
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Issue size |
SAR 43.52 mln |
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Qualified subscribers |
Saudis and GCC citizens |
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IPO minimum limit for retail |
10 shares |
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IPO maximum limit for retail |
1 mln shares |
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Retail IPO period |
4 days from July 2 until July 5, 2020 |
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Final allotment |
July 12, 2020 |
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Surplus return |
July 14, 2020 |
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Additional Information |
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Financial advisor, lead manager, underwriter, institutional book runner |
NCBC |
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Receiving banks |
SAIB, NCB, Al Rajhi Bank, Bank Aljazira |
Saudi Investment Bank (SAIB) is the largest shareholder in Amlak with a 22.41% stake, followed by Almak Finance Co. with a stake of 18.35%.
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Major Shareholders |
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After IPO |
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Shareholders |
Number of shares (mln shares) |
Stake % |
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SAIB |
20.30 |
22.41 % |
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|
Amlak Finance |
16.63 |
18.35 % |
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Al Tawfeek Development House Holding |
9.10 |
10.04 % |
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Makarem International Real Estate Development |
3.57 |
3.94 % |
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|
Aseer Trading & Tourism |
3.50 |
3.86 % |
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|
Remaining shareholders |
10.32 |
11.40 % |
|
|
Public |
27.18 |
30.00 % |
|
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Total |
90.60 |
100 % |
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