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Riyadh-based aluminum products maker Al Taiseer Group Talco Industrial (Talco) plans to take a 30% stake to Tadawul’s main market through a secondary share sale, it said in a prospectus (pdf). It is looking to sell 12 mn ordinary shares on the main market. The sale comes months after it lined up the Capital Market Authority’s approval in December.
The details: Institutional investors will be able to place orders for 100% of the offering’s shares, while the financial advisor has the right to allocate 10% of the offering to retail investors “if there is sufficient demand.” Each institutional investor can subscribe to up to 1.99 mn shares and a minimum of 50k shares, while each individual investor can subscribe to a maximum of 250k shares and a minimum of 10 shares.
About Talco: Founded in 1976, Talco makes and sells aluminum products, thermoset powder coating, and related accessories, according to the prospectus. Its products include powder coated aluminum, wood-finished aluminum, polyester powder, metallic powder, plastic bags and sheets and printing wrapping films.
The pitch: Talco is a leader in the industry, with a footprint in 26 countries across the GCC, MENA region and East Asia, Europe, US, and Australia. Several expansions throughout the years helped bring its aluminum production capacity to 60k MT as of June 2023. It currently operates two factories in Riyadh and one in Jeddah.
A snapshot of its financial performance: Talco’s net income grew 17.7% y-o-y to SAR 39.8 mn in 1H 2023 despite revenues falling 10.9% y-o-y to SAR 336.6 mn over the same period on lower aluminum prices. Still, aluminum products accounted for 87% of Talco’s total revenues in the first half of last year.
Post-IPO structure + lock-up period: Talco’s nine substantial shareholders are selling down their positions to a combined 65.09% stake from 92.99%. They will not be able to execute any transactions on their shares for a period of six months starting the first trading day.
Use of proceeds: Talco’s selling shareholders will take the transaction’s proceeds home after covering transaction related-expenses — estimated at SAR 16 mn. All the proceeds will be divided between the selling shareholders on a pro rata basis.
The IPO timeline: Bankers will take orders from institutional investors starting tomorrow until Thursday, 23 May, while the bookbuilding process for retail investors will run on Tuesday, 28 May to Wednesday, 29 May. A final allocation of shares is slated for Sunday, 2 June, with any excess subscription fees refunded on the same day. The first day of trading remains contingent on fulfilling regulatory requirements, according to the prospectus.
ADVISORS- Alinma Investment is quarterbacking the transaction as financial advisor, lead manager, bookrunner and underwriter, while Stat Law Firm is acting as legal advisor. PwC is Talco’s financial due diligence advisor. Front & Sullivan is serving as market consultant, while KPMG is acting as the company’s auditor. The receiving agents are Alinma Bank, Al Rajhi Bank, and Riyad Bank.
POULTRY PRODUCER ENTAJ INCHES CLOSER
Halal poultry producer Arasco Foods (Entaj) is seeking a listing on Tadawul’s main market after “reaching the final stages of submitting the IPO application,” Ziyad Alsheikh, CEO of parent company Arab Agricultural Services (Arasco), told Argaam. Alsheikh said Entaj has been working extensively on the IPO since last year, expecting the offering somewhere between the end of this year or early 2025 depending on regulatory approvals, he said.
About the company: Entaj says it is one of the fastest chicken producers in the Kingdom with a poultry processing capacity of 600k birds per day, according to its website. Its range of products include a variety of fresh, frozen, raw and pre-fried chicken options.
SAUDI IPO PIPELINE AT A GLANCE-
Among the transactions now in the market or expected soon:
- Fakeeh Care Group has priced its IPO at the top range after strong demand from institutional investors as it looks to become the largest IPO so far this year;
- Fintech startup Rasan is set to sell a 30% stake, with subscription period for institutional investors wrapping up over the weekend;
- Water treatment outfit Miahona has priced its IPO at the top of the range after recording strong investor appetite;
- Labor agency Saudi Manpower Company (Smasco) is selling a 30% stake; with a final share price to be announced today;
- Nupco — a unit of the PIF — has reportedly tapped Rothschild & Co as financial advisor for its potential Tadawul IPO
- Budget airline Flynas is reportedly looking to go public this year;
- PIF-backed lender Riyad Bank is considering the listing of its investment banking arm Riyad Capital;
- Hotels and resorts operator Boudl has filed to go public;
- Fourth Milling Company will list before the end of June;
- Singapore’s Olam Group is mulling the IPO of its Olam Agri subsidiary on Tadawul;
- Hypermarket operator Lulu is said to be eyeing a dual listing on Tadawul and ADX;
- Aster DM Healthcare looks set to spin-off its GCC assets and seek a dual listing on Tadawul and in the UAE.
Companies have so far raised nearly USD 700 mn through IPOs this year, with the largest current IPO being Modern Mills which listed in March.
Banking on an IPO boom: Saudi Stock Exchange CEO Mohammed Al Rumaih told Bloomberg earlier this month that he expects the IPO bonanza at home to continue with up to 50 companies seeking listings. “We have more than ten IPOs approved but waiting for book building and dealing with the asset managers to determine listing and offering dates,” Al Rumaih said.
