Saudi Arabia's fourth-largest flour producer, Arabian Mills for Food Products (formerly known as the Second Milling Company), is preparing to sell a 30% stake in an initial public offering (IPO) on the Saudi Stock Exchange (Tadawul). The move comes as the country implements its Vision 2030 plan to diversify its economy and lessen its reliance on oil revenue.
The Capital Markets Authority (CMA), Saudi Arabia's market regulator, approved Arabian Mills' application to go public. The company will release a detailed prospectus outlining the IPO specifics, including the pricing and timeline, closer to the launch of the share offering.
Established in 2017, Arabian Mills is part of a wider privatization program within Vision 2030. The company was acquired in 2021 for 2. 13 billion riyals ($568 million) by a consortium of investors. This included Abdulaziz Al-Ajlan and Bros Sons Company for Trading and Real Estate Investment, Al-Rajhi International Investment Company, Nadec, and Olam International Company.
The Arabian Mills IPO follows a similar public offering by Modern Mills, previously known as MC3, which occurred in March of this year. Modern Mills sold a 30% stake, raising $314. 6 million. The increasing number of IPOs in Saudi Arabia indicates a growing and dynamic stock market, buoyed by government initiatives to attract investment and create a diversified economic landscape.
Analysts suggest that the Arabian Mills IPO will likely generate significant interest from both domestic and international investors. The company boasts a well-established presence in the Saudi flour milling industry with a daily production capacity of around 4, 920 tons. Its operations are spread across three branches situated in Riyadh, Jazan, and Hail.
Saudi Arabia is the world's largest importer of wheat, a key ingredient in flour production. However, the government aims to achieve greater self-sufficiency in food production through investments in agricultural infrastructure and technology. Companies like Arabian Mills play a crucial role in this strategy by converting imported wheat into flour, a staple food in the region.
The upcoming IPO by Arabian Mills is a positive development for the Saudi flour milling industry and the country's economic diversification goals. It also presents a lucrative opportunity for investors seeking exposure to a growing food production company in a strategic market.