Zahrat Al Waha IPO begins today

The first phase of Zahrat Al Waha for Trading Co.’s initial public offering (IPO) starts on Sunday and will run through August 20, with 900,000 shares on offer to retail investors at a price of SAR 51 per share which was determined through the book building process.

The IPO is the first to take place this year in Saudi Arabia and will offer 4.5 million shares, or 30 percent, of the company’s capital. Of the total issuance, 80 percent of shares is allocated to institutional investors and 20 percent to retail.

During the book building process, shares allocated for institutions and mutual funds were 1.2 times oversubscribed.

Last June, The Capital Market Authority (CMA) has approved the prospectus for Zahrat Al Waha for Trading Company’s initial public offering on the Saudi Stock Market, Argaam reported.

In 2003, Zahrat Al waha was established in Riyadh as an individual institution owned by Ahmed Al Theyab with SAR 25 million in capital.

In 2015 it was converted to a limited liability company with a total capital of SAR 50 million which was then changed to a closed joint stock company in 2016 with SAR 80 million in capital.

The company has raised its capital many times since inception to reach SAR 150 million.

Zahrat Al Waha is engaged in factory building and maintenance, manufacturing industries, building and construction, money services, information technology, gas and water, social responsibility, agriculture and fishing as well as mining and petrol. It currently has four branches.

In 2016, the company’s domestic market share of plastic water bottles reached 37.6 percent while market share of plastic bottle caps reached 21.8 percent.

Company Profile
Stock market	Saudi Stock Exchange (Tadawul)
Company’s core business	Factory building and maintenance, manufacturing industries, building and construction, money services, information technology, gas and water, social responsibility, agriculture and fishing as well as mining and petrol.
Company’s status	Active
Company’s capital	SAR 150 mln

Products & Clients
Raw materials	Uses polyethylene terephthalate (PET) and high intensity polyethylene (HIPE). SABIC is main supplier
Net profit	Profits are seasonal, rises during summer and drops in winter
Major clients	Nova Water and Hana Water which account for over 36% and 27% of company’s sales respectively
Production capacity	Has 21 production line producing 7 billion pet polyforms in 15 different sizes per year and produces 6 billion plastic caps annually
Future plans	It currently has no significant new products or activities

IPO Details
IPO Percentage	30%
Number of retail investors IPO shares	0.9 mln shares
Retail Investors IPO shares percentage	20% of total IPO shares
Issuance price	SAR 51 /share
Size of retail investors issue	SAR 45.9 mln
Eligible subscribers	Saudi citizens
IPO date	August 13 to August 20, 2017
IPO minimum	10 shares
IPO maximum	250,000 shares
Allocation	August 27, 2017
Surplus payment	August 27, 2017

Additional Information
Financial Advisor, lead manager and underwriter	Banque Saudi Fransi
Receiving banks	National Commercial Bank, Banque Saudi Fransi, SAMBA and Riyad Bank
Use of IPO proceeds	Will be paid to selling shareholder after deduction SAR 17 million IPO fees. The company won’t receive any amount of IPO proceeds.

Major Shareholders
Owners	Shares before IPO (mln)	Stake % before IPO	Shares after IPO (mln)	Stake% after IPO
Ahmed Hamoud Al Theyab	14.85	99%	10.35	69%
Rakan Ahmed Hamoud Al Theyab	0.15	1%	0.15	1%
Public	--	--	4.50	30%
Total	15.00	100%	15.00	100%

Recent IPOs in Saudi Market
Company	Issuance price	Number of shares issued to retail investors	Coverage ratio (retail investors)
2016
L’Azurde	37	3.87	293%
Yamamah Steel	36	4.57	479%
Saudi German Hospital	64	8.28	274%
2015
Alandalus Property	18	8.40	469%
SGS	50	22.60	339%
SACO	70	2.88	620%
MEPCO	30	6.00	473%

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