Saudi Utility’s US$897m IPO fully covered within hours

MARAFIQ, the Saudi Arabian utility whose shareholders include Aramco and Sabic, secured enough investor demand to fully cover its up to US$897 million initial public offering (IPO) within hours of opening order books.

Power and Water Utility Company for Jubail and Yanbu, as the company is formally known, on Sunday (Oct 9) set the price range for its IPO at between 41 riyals and 46 riyals a share, it said. Books are covered throughout the range, according to terms of the deal seen by Bloomberg News.

Marafiq is part of a late-year rush of IPOs in the Middle East even as markets worldwide are hit by inflation fears and the risk of an economic slowdown. A surge in oil prices at the start of 2022, as well as increased investor inflows, led to a flurry of listings in the Gulf, which notched up its best first half on record. 

While a regional equity rally has since faltered and Saudi stocks briefly entered a bear market last month, IPOs have continued at a fast clip with issuers looking to take advantage of continued strong demand for share sales. Last month, a Saudi Arabian oilfield-services company also got enough orders for all shares on offer within hours.

Marafiq’s IPO is the largest in the kingdom since pharmacy chain Nahdi Medical Co raised US$1.4 billion.

Book-building for Marafiq’s IPO opens on Sunday and lasts until Oct 14, followed by a retail offering from Oct 26 to Oct 29. The company would have a market value of US$3.1 billion at the top end of the price range.

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Marafiq has hired banks including HSBC Holdings and Riyad Capital to manage the process. Shareholders who own 5 per cent or more in Marafiq are the Royal Commission for Jubail and Yanbu, Public Investment Fund, Saudi Aramco Power Co and Saudi Basic Industries Corp.  BLOOMBERG