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|16 April, 2019

Arabian Centres confirms plan to float on Saudi exchange

The company is planning to float up to 20 percent of its shares and use proceeds to pay debts

Arabian Centres, Saudi Arabia's biggest owner and operator of shopping malls, plans to float on the Saudi stock exchange.

Arabian Centres, Saudi Arabia's biggest owner and operator of shopping malls, plans to float on the Saudi stock exchange.

Arabian Centres / Handout via Zawya

Arabian Centres, Saudi Arabia's biggest owner and operator of shopping malls, has confirmed plans to float on the Saudi stock exchange, Tadawul.

The company, which is owned by the Fawaz Alhokair Group said in an announcement on Tuesday morning that it will float up to 20 percent of its shares, and use the proceeds to pay down debt, as well as for "general corporate purposes".

The company currently owns 19 shopping centres in 10 cities, containing a combined 1.1 million square metres (11.8 million sq ft) of gross leasable space. Within the kingdom's four major metropolitan areas (Riyadh, Jeddah, Dammam and Makkah), it enjoys a 14 percent share and the centres attract 109 million visitors per year.

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The company is also planning to open a further four new malls and extend one of its existing sites within the next 12 months, which will increase its gross leasable area to 1.38 million square metres (sq m), and says five more "medium-term" projects will increase its gross leasable area by a further 355,000 sq m from 2021 onwards.

In its announcement of its intention to list issued on Tuesday morning, the company said that it had "demonstrated robust growth" over the past two years, with revenue increasing to $576 million, generating underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $374 million.

Fawaz Alhokair, chairman of Arabian Centres, said that the company is "the undisputed market leader in lifestyle shopping centres in Saudi Arabia".

"By pursuing an initial public offering, we are laying the groundwork for the next chapter of our growth story and are offering investors – both domestic and international – the opportunity to invest in a dynamic company and industry well-positioned to benefit from the longer-term structural growth path within the retail sector in the Kingdom.”

Saudi Arabia is currently enjoying something of a boom in terms of retail space, according to a JLL MENA report published in February.

In the kingdom's capital, Riyadh, the amount of retail space is predicted to increase by almost 22 percent by the end of this year, with 470,000 sq m of space due to be added to the 2.15 million sq m the market had at the end of last year.

In Jeddah, some 108,000 sq m is due to be added this year, and a further 280,000 sq m will be added next year, bringing the total space up by 27.5 percent over a two-year period to more than 1.8 million sq m next year.

JLL's report said that it expects new mall developments "to offer more entertainment and F&B concepts, adopt unique designs and interactive technologies, and expand their tenant mix to include international brands".

(Writing by Michael Fahy; Editing by Mily Chakrabarty)

(michael.fahy@refinitiv.com)

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© ZAWYA 2019

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