Arabian Mills set a price range on Sunday for its SR954m–SR1.016bn (US$254m–$271m) all-secondary IPO that will be the third milling company to list on Tadawul.

Books were covered in around half an hour after the SR62–SR66 range was set for 15.4m shares on offer, representing 30% of the company.

The sellers are real estate company Abdulaziz Al Ajlan Sons, which has a 50.13% stake, Sulaiman Abdulaziz Al-Rajhi International (35%) and National Agricultural Development Company (14.87%).

The range represents a market capitalisation of SR3.18bn–SR3.39bn, slightly below Modern Mills at nearly SR4bn and First Milling at SR3.94bn.

Arabian Mills was the second-largest flour producer in the country in 2023 with a market share of 28.4% by volume. Revenue was SR862m, with profit of SR200m and Ebitda of SR383m. Between 2021 and 2023, the CAGR in profit was 28.5%, with a CAGR of 46.7% for Ebitda over the same period.

Arabian Mills, known as Second Milling Company until a 2023 rebrand, has near-perfect comparables in First Milling and Modern Mills, two of four flour companies that were privatised in 2020 and 2021. Second Milling was sold in 2021 for SR2.138bn.

Although dividend yield is of interest, the key metric for investors is its price-to-earnings multiple. For 2025, Arabian Mills has an estimated P/E on pricing of 13.5–14.4, with a dividend yield of 4.5%–4.8%.

The equivalent numbers for First Milling are P/E of 13.7 and a dividend yield of 4.3%, and for Modern Mills a P/E of 16.7 and 4% dividend yield.

As is typical, the IPO will be allocated to institutions first, with up to 10% clawed back for retail.

Books opened alongside the launch of the roadshow and close at 5pm locally on Thursday. Pricing and initial allocations are due on September 11, with a retail offer running on September 18–19 and final allocations due on September 26.

HSBC is bookrunner and financial adviser.

Demand has continued to flow in for the IPO of NMDC Energy following the start of bookbuilding on Friday for its Dh3.22bn (US$877m) Abu Dhabi Securities Exchange IPO.

Books were seven times covered by the second day of subscription and close on Wednesday, with trading due on September 11.

The float comprises 1.15bn shares with pricing fixed at Dh2.80 each. First Abu Dhabi Bank is running the IPO.

While just a handful of European IPOs are expected to launch in September and October, Middle East activity is likely to be more ambitious.

Prior to the summer break, Middle East bankers had predicted around a dozen IPOs in the second half, split fairly evenly between Saudi Arabia and the UAE. Talking to IFR on Monday, a banker focused on the region revised that to high single digits.

The banker said some are more likely to come in 2025, with next year expected to be slightly busier than 2024 due to organic growth of the market.

A 30% IPO of Fourth Mills, which was sold for SR859m in 2021, is due before the end of 2024. It secured approval from the Saudi Capital Market Authority in June, as did United International, owner of consumer finance business Tasheel.

Initial institutional allocations are due at the end of this week for Al Majed for Oud’s up to SR705m Tadawul IPO, for which institutional books closed on Thursday. A retail leg is due on September 15.

Delivery Hero is preparing a Dubai Financial Market float in the fourth quarter for its regional food delivery app Talabat, most likely offering secondary shares, though that is earlier than anticipated and could slip to 2025. Amanat Holdings is also considering listing Amanat Education, which owns three universities in the UAE, and 60% of care provider Human Development.

Potentially further out is an IPO of Abu Dhabi National Hotels subsidiary ADNH Catering, which had revenue of US$490m in 2023. It operates in the UAE and Saudi Arabia and claimed an up to 32% share of the UAE food services market in 2023.

Other names that may come before the end of the year are airline operator Etihad, supermarket operator Lulu (on Tadawul and Abu Dhabi exchanges), budget airline Flynas, coffee chain Barn’s and luxury hotelier Five.

Oman may also feature with two potential IPOs from state energy firm OQ following the October 2023 OR297m (US$771m) IPO of OQ Gas Networks.

Source: IFR