TASI opens Arabian Mills two-day retail IPO

Logo of Arabian Mills for Food Products Co.

Retail offering for 1.54 million shares of Arabian Mills Co. on Tadawul begins today, Sept. 18, at a price of SAR 66 per share, which was determined through the book-building process. The offering continues for two days until Sept. 19.

The shares allocated to individual subscribers represent 10% of total shares offered for public subscription.

For More IPOs

In June, the Capital Market Authority (CMA) approved the company’s application to list and offer 15.39 million shares on TASI, representing 30% of its capital, with a nominal value of SAR 10 apiece.

Institutional offering ended last week, with a coverage ratio of 132 times.

Arabian Mills’ IPO is the ninth this year for the Main Market, after Middle East Pharmaceutical Industries Co. (Avalon Pharma) on Jan. 30, Modern Mills for Food Products Co. on March 5, Miahona and Dr. Soliman Abdulkader Fakeeh Hospital Co. (Fakeeh Care Group) on May 21, Saudi Manpower Solutions Co. (SMASCO) on May 26, Al Taiseer Group Talco Industrial Co. (TALCO) on May 28, Rasan Information Technology Co. on May 29 and Almajed Oud on Sept. 15.

Tadawul witnessed eight IPOs in 2023, including MBC Holding Group Ltd., Morabaha Marina and Mawarid Manpower Co., Jamjoom Pharmaceuticals Factory Co., First Milling Co., Lumi Rental Co., ADES Holding Co., and SAL Saudi Logistics Services Co.

Company Information

Arabian Mills —formerly known as Second Milling Company (MC2) —was established in October 2016 as part of the privatization program of Saudi Grains Organization, data available to Argaam showed.

In April 2021, the National Center for Privatization & PPP (NCP) awarded the sale of Arabian Mills to the consortium of Ajlan & Bros Holding Group (ABHG), Al Rajhi International for Investment (RAII), National Agricultural Development Co. (NADEC), and Olam International. This consortium submitted a bid totaling SAR 2.13 billion.

In December 2021, NADEC completed the transfer of all assets of MC2 to Food Security Holding Co., merging the two entities into Second Milling Co. ABHG acquired the entire stake of Olam International, while NADEC increased its ownership share to 14.9%.

The company was established to produce and provide wheat and feed products Kingdom-wide. Its main business activities include the production and storage of flour, other wheat derivatives and feed.

Arabian Mills owns two trademarks for its products, namely "Finah" and "Kamel". The company uses "Finah" trademark for its food products of flour and other wheat derivatives, which include various types of flour, semolina, wheat germ and wheat bran prepared for human consumption. Meanwhile, "Kamel" trademark is used for its animal fodder products, which include poultry feed, various types of livestock feed and wheat bran prepared for animal consumption.

Company Factories

In its operations, the company relies on its three factories equipped with the latest technologies and located in strategic locations in Riyadh (in the central region), Hail (in the northern region) and Jazan (in the southern region).

The total production capacity of the company's factories is about 4,920 tons of flour per day, and 600 tons per day of feed.

According to the prospectus, the company held the second largest share in the Saudi flour market at 27.8%, or 943,700 tons of flour, in 2022. This was achieved by growing its customer base, expanding distribution networks, and developing new sales channels.

The company is also among the largest 10 players in the feed market in terms of market share, which reached about 3.5% in 2022.

Distribution Channels

Arabian Mills developed robust distribution channels across the Kingdom. The company owns three main distribution channels: the B2B sales channel, wholesale and retail sales channel, and the feed sales channel.

The company distributes its products to about 6,400 beneficiaries through 375 distributors and 281 direct customers through the B2B sales channel, and to 485 retail and wholesale trade entities and nine modern trade entities that have more than 500 branches within the retail and wholesale sales channel.

The following table shows the distribution the company's revenues, according to each distribution channel for the last three years:

*Includes revenues of sales to government entities.

**Referred to in the financial statements as retail sales.

The company employees reached 622 by 2023-end, including 228 Saudi citizens as the nationalization rate reached 40.08% during the same period.