The Saudi Arabia-based power and water utility for Jubail and Yanbu is moving forward with plans to list its shares on the Tadawul Stock Exchange amid continued IPO momentum in the region’s stock markets.
The utility company, known as Marafiq, received regulatory approval to go public on Sept. 26 and plans to list 30 percent of its share capital, or 73,094,500 common shares, it said in a statement Sunday.
The state-backed company counts the Kingdom’s State Investment Fund, the Public Investment Fund, the Royal Commission for Jubail and Yanbu, Saudi Aramco’s subsidiary, Aramco Power Company, and Saudi Basic Industries Corporation (Sabic) among its shareholders, each with 24, 81 percent.
The final offering price will be determined at the end of a bookbuilding process, the company said, without disclosing when it intends to list the shares.
“Today’s announcement marks an important milestone in Marafiq’s journey, a journey that began almost 20 years ago,” said Mohammed Al-Zuabi, President and CEO of Marafiq.
“We have since evolved into an integrated utility company offering a full range of services across the entire utility value chain, with a growing presence across the UK.”
While capital markets in the US and Europe have plummeted amid inflation worries and fears of a looming recession, stock markets in the Gulf States and the wider Mena region have seen a spate of IPOs, with various state-owned companies listing their shares.
According to an EY report on Mena IPOs, in the first six months of this year, Mena saw a 500 percent increase in the number of listings year-over-year, with 24 IPOs raising $13.5 billion. In the second quarter of 2022, nine IPOs raised approximately $9 billion.
Globally, 630 IPOs raised $95.4 billion in revenue in the first half, a substantial 46 percent annual decline in the number of deals and a 58 percent drop in revenue generated, the report added.
The UAE was the largest IPO market in terms of total transaction value, while the kingdom led in volume with five IPO deals in the first six months of the year, according to EY data.
Marafiq will be the fifth utility company to be listed on Tadawul, the largest stock exchange in the Arab world, alongside big names Saudi Electricity Company and Acwa Power.
The company mainly serves industrial centers in Jubail and Yanbu and counts some of the world’s largest industrial companies among its customers, accounting for 86 percent of its total 2021 sales of 6.2 billion riyals (US$1.65 billion).
The company, which posted net profit of 665 million riyals last year, has 15,147 retail and business customers and 4,132 industrial and government customers, it said on Sunday.
“Such a solid customer base ensures sufficient and stable demand for utility services and low counterparty credit risk,” the company said.
Combined, Marafiq and its subsidiaries have about 4.8 gigawatts of gross electricity generation capacity, which is about 3.2 percent of the kingdom’s total output.
Marafiq also offers water desalination, seawater cooling and wastewater treatment with 1.3 million cubic meters of desalinated water per day.
“Marafiq is a crucial part of Saudi Arabia’s industrial ambitions, which are central to the Kingdom’s 2030 Vision,” said Khalid Al Salem, Chairman of Marafiq.
“With our strong presence in two of Saudi Arabia’s most strategic industrial cities and a growing footprint across the Kingdom, the IPO of Marafiq is an opportunity for investors not only to benefit from our steady and reliable cash flow, but also to be part of an exciting one growth story.”
HSBC Saudi Arabia and Riyadh Capital are joint financial advisers, bookrunners, joint global coordinators and underwriters on the transaction. Al Rajhi Bank, Banque Saudi Fransi, Riyad Bank, Saudi British Bank and Saudi National Bank have been designated as receiving agencies.
Updated October 02, 2022 8:51 am
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