Nayifat Finance Company to float on Saudi market

Loans firm to use proceeds to fund expansion, develop credit card business

  
A trader uses his mobile as he monitors screens displaying stock information at the Saudi Stock Exchange (Tadawul) in Riyadh June 15, 2015.

A trader uses his mobile as he monitors screens displaying stock information at the Saudi Stock Exchange (Tadawul) in Riyadh June 15, 2015.

REUTERS/Faisal Al Nasser

Nayifat Finance Company, a Riyadh-based non-bank financial institution (NBFI), has announced plans to float on Saudi Arabia's stock exchange, Tadawul.

In a statement issued on Monday morning, the company said that it would offer 36.5 million shares, or around 30 percent of its share capital, to investors. 

Nayifat Financing, which began in 2002, provides Shariah-compliant finance to more than 40,000 customers. It offers loans to consumers and to SMEs, as well as lease and credit card financing and has a gross asset portfolio of more than 2.23 billion Saudi riyals ($472.7 million) as of March 31.

Currently, some 71.68 percent of its shares are owned by Falcom Holding, 7.58 percent are owned by chairman Saud Huwaimel Farraj Al Dosari and 7.04 percent by Abdulaziz Saud Omar Al Blehed.

The company said that current shareholders will not receive proceeds from the offering, with the funds being used to grow its financing portfolio and add credit cards to its product range.

It said its expansion strategy is based partly on boosting its market penetration in the individual financing market, offering loans to public sector employees, to grow financing to SMEs, to roll out its credit card offer and to expand within the kingdom, where it currently has 23 branches but plans to open five more by the end of 2022. Revenue has grown by 3 percent per, while net income has grown by 11.2 percent per year to reach 172.4 million Saudi riyals in 2018. In the first quarter of 2019, net profit was flat at 46.64 million riyals as revenue edged up by 1.12 percent to 84.9 million riyals.

Chairman Saud Huwaimel Farraj Al Dosari said that its IPO announcement was "an important milestone for the company.

"For some time, we have occupied a leading position in the Saudi NBFI industry, and this latest achievement is testament to the diligence and hard work that have been shown by management and staff since Nayifat’s foundation in 2002."

The company's CEO, Abdulmohsen Al Sowailem, said: "Our aim is to consolidate Nayifat’s place as Saudi Arabia’s premier NBFI, with key pillars of our expansion being consumer finance and our expansion in SME financing and credit card products. These initiatives require capital, of which we aim to raise a healthy portion through offering roughly 30 percent of our equity to the public.

"An increasingly stable economic environment and robust regulatory framework – both of which are highly supportive of the SME customer segment – will further enhance our growth objectives,” he added.

A bookbuilding process for the IPO will begin with institutions next week. NCB Capital has been appointed as financial advisor for the IPO process, alongside Falcom Financial Services.

(Writing by Michael Fahy; Editing by Mily Chakrabarty)

(michael.fahy@refinitiv.com)

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© ZAWYA 2019

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