Saudi Arabia’s Alhokair Follows Emaar With Mall Unit IPO

Saudi Arabia’s Fawaz Alhokair Group plans to raise $2 billion from the initial public offering of its Arabian Centres malls unit, surpassing a similar sale by rival Dubai operator Emaar Properties PJSC earlier this year.

A financial adviser for the sale of the 30 percent stake will be hired before the end of the year, Muhanad Awad, chief executive officer of FAS Capital, the financial and investment arm of Fawaz Alhokair Group, said yesterday by phone. The IPO will probably take place on the Saudi Stock Exchange in 2016, he said. Arabian Centres owns 15 malls in Saudi Arabia with nine more under construction. It also has one outlet in Egypt.

“We’re still in the early stages of working on this and discussing with potential financial advisers,” Awad said. “The offering will be similar to what Emaar Malls did, maybe a bit bigger. We’ll raise about $2 billion or a little more.”

At $2 billion, the IPO would surpass the $1.6 billion raised in September by Dubai’s Emaar Malls Group PJSC, operator of the world’s largest shopping center by area. Emaar, which sold 15 percent of its unit, attracted 104 million visitors to its malls in 2013, compared with more than 140 million shoppers at Arabian Centres developments such as Jeddah’s Mall of Arabia.

Market Opening

Saudi Arabia is preparing to open up its $548 billion stock exchange to foreign investors in the first half of next year, spurring investor interest in the largest Arab economy. The Capital Market Authority in August proposed rules that would allow foreign investors to hold as much as 10 percent of the value of the stock exchange.

The exchange has gained 12 percent this year, encouraging companies to consider share sales. National Commercial Bank raised $6 billion from retail investors earlier this month in the second biggest IPO of the year, behind Chinese e-commerce business Alibaba’s $25 billion IPO in September. ACWA Power International is also considering a $1.1 billion IPO, people with knowledge of the matter said earlier this year.

Fawaz Alhokair Group listed its Alhokair Fashion Retail unit on the Saudi Stock Exchange in 2006. It’s also known as Fawaz Abdulaziz Alhokair & Co.

Companies in Saudi Arabia have raised $7.1 billion from the equity markets this year, according to data compiled by Bloomberg, with the $6 billion National Commercial Bank offering accounting for the bulk of that activity. Last year, they raised $216 million.

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