Saudi Arabia: SRMG IPO Oversubscribed 132 Percent in Three Days

JEDDAH, 12 April 2006 -- The initial public offering (IPO) of Saudi Research & Marketing Group (SRMG) was oversubscribed by 132 percent in three days, according to a statement issued by Samba Financial Group, which is managing the IPO, the first by a media company in the Arab world.

"More than 582,000 subscribers invested SR1.456 billion in SRMG shares by the end of the third day," said Eissa Al-Eissa, managing director and chief executive of Samba, adding that their subscription covered 132 percent of shares.

SRMG has offered 24 million shares for SR46 each with a total value of SR1.104 billion in the IPO, which was launched on Saturday and will continue until April 17. Al-Eissa said flexibility and ease of functioning have been the hallmarks of the subscription process.

"On the third day alone there were 56,000 applications with a total value of SR484 million," the Samba chief said, adding that people used various channels including the Internet, ATMs and telephone banking to carry out 52 percent of operations.

In a previous statement, Al-Eissa had predicted big demand for SRMG shares in view of the group's track record and status as a leading publishing organization in the region, and its robust performance.

SRMG announced recently that its first-quarter net profit this year grew by 120 percent to SR61.1 million compared to the same period last year when the figure was SR27.8 million. "The results have also shown a 15 percent growth rate in sales in the first quarter compared to the same period last year," it added.

Prince Faisal Bin Salman, chairman of SRMG, has stated that the flotation of shares would be a "qualitative addition" to the Saudi stock market because of the company's strong financial standing.

He said the purchase of 5.62 percent of SRMG by the General Organization for Social Insurance and the Pension Fund would strengthen investor confidence.

During an interview with Al-Arabiya satellite channel on Sunday, Prince Faisal also disclosed plans to launch a separate IPO for Al-Madina Printing & Publishing Company this year or early next year.

He said the group would hold the majority share in Al-Madina and float 30 percent for public subscription.

Calling GOSI and Pension Fund as professional investors, the chairman said their presence on SRMG board would strengthen the company.

"They are not speculators and are not looking for short-term profits. They have full confidence in our company's strength and financial position," he said.

The SRMG chief said the company's management was not exercising any control on editorial decisions in terms of publishing news and articles.

"The editorial boards are totally separated from the management," he explained. "The selection of news and articles is the responsibility of the editor in chief. The opinions published are of their authors, not of the company or the management."

He said the group's publications follow the rules of the countries where they are printed. "In Britain, for example, we follow the British publishing law," he said.

Prince Faisal said the company was in the process of setting out an internal governing system, adding that it would be issued shortly.

By P.K. Abdul Ghafour