JEDDAH -- The initial public offering (IPO) in the newly established Al-Bilad Bank, involving 30 million shares worth SR1.5 billion, will start on Nov. 27, Al-Madinah Arabic daily reported yesterday quoting high-level sources. The sources said all banks in the Kingdom would take part in the IPO, in which half of the new bank's shares would be sold to public at the rate of SR50 per share.
The bank's management is currently holding talks with the Financial Market Authority to fix the maximum and minimum number of shares to be subscribed by citizens.
The Council of Ministers on Monday formally approved the launch of Al-Bilad, an Islamic bank created through the merger of eight money exchangers. The SR3 billion bank is likely to start its services by the first quarter of next year.
Khaled Al-Muqairen, a member of the constituent committee, said Al-Bilad would market new products and services to absorb the "huge liquidity" in the Kingdom. He said the new bank would acquire advanced banking technology to provide modern services to its clients. "Our focus will be on extending Islamic banking services," he added.
Ibrahim Al-Subaie, another member of the committee, expected that Al-Bilad IPO would be oversubscribed 20 times. "The success of Etisalat IPO reflects liquidity of Saudis and influx of huge funds from abroad," he pointed out.
According to Dr. Abdullah Al-Ibrahim, economics professor at King Fahd University of Petroleum and Minerals, the new IPO will attract a large number of small investors. He expected that prices of Al-Bilad shares would jump to SR200 or SR250 once they are exchanged on the bourse. "This means its value will be equal to that of Al-Jazira Bank," he added.
Last month's SR1 billion offering of shares in Etisalat Consortium, which was 51 times oversubscribed, showed a hunger for shares in the Kingdom, where many investors are hunting for opportunities.
The official Saudi share index is up more than 60 percent this year, building on a 76 percent surge in 2003.
Dr. Muhammad Al-Awad, deputy marketing manager, said the bank would issue four million subscription forms for the IPO to meet public demand.
Based in Riyadh, Al-Bilad will have branches in various parts of the Kingdom and will make use of modern technology and trained personnel to extend quality services.
In the first phase it will have 30 to 40 branches. "The opening of branches will depend on the need of citizens in various parts of the country," Khaled Al-Rajhi, another member said.
Al-Bilad's founders will have a 50 percent stake in the bank. Muhammad & Abdullah Ibrahim Al-Subaie Company holds the lion's share of 42 percent while Al-Muqairen Money Exchange holds 18 percent, Al-Rajhi Commercial Foreign Exchange 16 percent, and Al-Rajhi Trading Est. 14 percent.
Other partners Muhammad Saleh Sairafi Est. will have a five percent stake in the bank while Injaz Money Exchange will hold three percent, Abdul Mohsen Saleh Al-Amri Est. and Ali Hazza & Partners for Trade and Money Exchange one percent each.
P.K. Abdul Ghafour
© Arab News 2004
