Saudi Arabia - Retal Urban Development Company, a next generation real estate development company, intends to proceed with an Initial Public Offering (IPO) and list its shares on the Main Market of the Saudi Stock Exchange.

The Capital Market Authority (CMA) has approved the company’s application for the IPO of 12,000,000 ordinary shares, representing 30% of its share capital. The final offer price will be determined at the end of the book-building period.

The company has developed a number of Saudi Arabia’s most prestigious and exciting communities, including Nesaj Town Dammam 1 and 2, Nesaj Town AlKhobar and Retal Residence. It has also developed a number of residential communities under the ‘Ewan’ brand, including Ewan Al Nahda, Ewan Al Nawras and Ewan Al Maali, and launched the high-end villa project, Ayala, with its new concept and digital pre-customisation, which allows customers to choose and add the details to their liking and make modifications to designs and spaces prior to purchase.

Hospitality projects

These projects are complemented by lifestyle-oriented recreational amenities such as parks, water features, and other outdoor spaces. Additionally, Retal has projects in the hospitality sector, such Nobo which is part of Retal Rise luxury residential tower, and other sectors such as Retal Business Center – Riyadh, which offers modern and luxury office spaces that cater to the new workplace environment.

The company is also developing Ewan Sidra, the first residential project to be developed with ROSHN (a PIF owned company).

As of September 30, 2021G, Retal’s portfolio comprises over 30 completed and ongoing projects with a total of over 7,000 units, of which about 2,957 units were completed by 30 June 2021 in Riyadh, Jeddah and the Eastern Province in Saudi Arabia.

Between 2018G and 2020G, the company’s annual revenue grew by 181% from SR209 million ($56 million) in 2018G to SR587 million in 2020G and net income jumped from SR3 million to SR99 million from 2018G to 2020G. Net income for the nine-month period ended September 30, 2021G was up to SR120 million.

Key milestone

Abdullah bin Abdullatif bin Ahmed Al-Fozan, Chairman of the Board of Directors, Retal, said: "The IPO marks a significant milestone in the growth trajectory of our business and a key step towards further solidifying our leading position in the Saudi real estate sector. Our potential listing comes at an exceptionally exciting time as we continue to make remarkable strides towards opening up to the world, creating new opportunities, and elevating the lifestyle of every Saudi family as part of the Vision 2030.”

Eng Abdullah bin Faisal bin Abdulaziz Al-Braikan, Chief Executive Officer of Retal, said: "Retal has grown to become one of the most trusted developers of iconic master-planned communities that shape the urban fabric of Saudi. Opening the business to public investors will consummate the process of growth we have undertaken in the last ten years."

“We are already witnessing a huge demand for high quality developments in desirable destinations across the country. We anticipate this demand to continue, driven by strong economic trends, favorable long-term demographics, and Saudi’s commitment to transform the real estate landscape and improve the standard of living in the country through the development of real estate laws and regulations. With Retal’s robust strategy, expertise, and financial strength, we are poised to capture these exciting opportunities while delivering excellent value to our shareholders.”

Highlights of the offer

With respect to the Offering, the company has appointed SNB Capital as the Sole Financial Advisor, Lead Manager, Bookrunner and Underwriter.

The Saudi National Bank (SNB), Riyad Bank and Albilad Bank have been appointed as receiving entities For the individual investors tranche.

The CMA and Saudi Exchange approvals have been obtained for the offering and listing outlined below:

The Offering will be restricted to the following two groups of investors:

Tranche (A): Participating Parties: this tranche comprises the parties entitled to participate in the book building process as specified under the Instructions for Book Building Process and Allocation Method in Initial Public Offerings issued by the Capital Market Authority Board pursuant to Resolution No. 2.94-2016 dated 15/10/1437H (corresponding to 20/07/2016G), as amended by CMA Board Resolution No. 3-102-2019 dated 18/01/1441H (corresponding to 17/09/2019G). The number of Offer Shares to be provisionally allocated to Participating Parties is twelve million (12,000,000) Offer Shares, representing 100% of the total Offer Shares. Final allocation of the Offer Shares will be made after the end of the subscription period for Individual Investors. In the event that Individual Investors (as defined in Tranche B below) subscribe for the Offer Shares allocated thereto, the Lead Manager shall have the right to reduce the number of shares allocated to Participating Parties to a minimum of ten million, eight hundred thousand (10,800,000) Offer Shares, representing 90% of the total Offer Shares.

Tranche (B): Individual Investors: this tranche comprises Saudi Arabian natural persons, including any Saudi female divorcee or widow with minor children from a marriage to a non-Saudi, who can subscribe under their names for her own benefit, on the condition that she proves that she is a divorcee or widow and the mother of her minor children, in addition to any non-Saudi natural person who is resident in the Kingdom or any GCC natural persons, provided they have a bank account with one of the Receiving Entities and are allowed to open an investment account.

Subscription of a person in the name of his divorcee shall be deemed invalid, and if a transaction of this nature is proved to have occurred, the law shall be enforced against such person. If a duplicate subscription is made, the second subscription will be considered void and only the first subscription will be accepted.

A maximum of one million, two hundred thousand (1,200,000) Offer Shares, representing 10% of the total Offer Shares, will be allocated to Individual Investors, provided that Participating Parties subscribe to all the Offer Shares allocated thereto. In the event that Individual Investors subscribe for all the Offer Shares allocated thereto, the Lead Manager shall have the right to reduce the number of shares allocated to Individual Investors in proportion to the number of Offer Shares subscribed for thereby.

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