Saudi: Mortgage lender Amlak International plans IPO

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Saudi Arabia’s Amlak International for Real Estate Finance is planning to sell shares through an initial public offering.

The lender will offer 27.2 million shares, representing 30 per cent of its capital, according to a statement on Sunday. It did not indicate a price range for the offering, but said the net proceeds of the offering will be paid to the selling shareholders on a pro-rata basis.

“Our listing on Tadawul marks a new chapter in the story of the company, and the board has every expectation that management and staff will fulfil the trust that the market places in us. We look forward to delivering on the strategic roadmap we have set out for the years ahead,” said Abdullah Al Howaish, chairman of Amlak International.

The company has appointed NCB Capital as the sole financial adviser for the listing.

Amlak International is a non-bank real estate finance company established in 2007 and licensed by the Saudi Arabian Monetary Authority to provide Sharia-compliant real estate financing solutions to corporate, high net-worth and individual clients.

Amlak International is planning to proceed with an Initial Public Offering on Tadawul stock exchange. AFP 

The company reported a revenue of 296 million riyals (Dh290m) and earnings before tax (EBT) of 102m riyals at a margin of 34.4 per cent in 2019. During the first quarter, it posted revenue of 75m riyals and EBT of 33m riyals at a margin of 44 per cent.

“We are ready to capture a growing number of opportunities, in particular those provided by the positive market dynamics created by the kingdom’s Vision 2030 reform programme,” Abdullah Al Sudairy, chief executive of Amlak International, said.

“Among our most important competitive advantages is our diverse lending portfolio, which covers the full corporate and individuals spectrum. This will enable Amlak to build on its strong position in the corporate real estate financing segment, while supporting Saudi nationals in their ambitions to buy and build homes.”

Driven by population growth and supportive government policy, housing demand in the kingdom is expected to increase to 188,000 units per year until 2021, to 203,000 per year from 2022-2025 and to 219,000 per year from 2026-2029, the company said.

The Ministry of Housing is targeting to disburse 204,000 individual contracts for housing this year, up from 179,217 in 2019, which had a combined value of 79bn riyals.

The size of the real estate financing market is expected to grow by a compound annual rate of 8.7 per cent to exceed 1 trillion riyals by 2029, the company added.

“Demand for real estate financing is accelerating, and our substantial funding base and first-class technology platform put us in a position to increase momentum,” Mr Al Sudairy said.

Amlak has access to a wide and diverse range of funding sources, with 3.5bn riyals in available credit with banks, of which more than 39 per cent is unutilised, it said. As at December 31, 2019, 65 per cent of the company’s funding was provided by Sharia-compliant debt, and 35 per cent from internal resources.

Saudi Arabia unveiled Vision 2030 in 2016, an economic overhaul plan designed to diversify revenue streams, nurture local industries and reduce the country’s dependence on oil. The country is also reforming local laws and regulations to attract more foreign investment.

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The value of IPO deals in the Gulf jumped 14-fold year-on-year in the first quarter of 2020 as companies eyed listing on local bourses following Saudi Aramco’s record-breaking market debut late last year.

Three IPOs were recorded in the Gulf during the first three months of the year, raising $801.3m (Dh2.94bn), compared to one listing worth $57.6m in the same quarter a year ago, according to consultancy EY’s Mena IPO report published last week.

Two of the three GCC listings in the quarter were in Saudi Arabia, with the largest being the $700.9m IPO of Dr Sulaiman Al Habib Medical Services Company, a healthcare group operating hospitals, medical centres and pharmacies.

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