Billionaire Olayan Family May List Assets on Saudi ExchangeBy
Company may IPO holding company or individual companies
Saudi Arabia seeks to cut oil dependence, become financial hub
Saudi Arabia’s billionaire Olayan family, which runs one of the nation’s biggest conglomerates, is considering selling shares in some of its local assets as the kingdom seeks to transform itself into a finance and investing hub.
Olayan Financing Co., which controls the family’s investments in the Middle East, may offer shares in one or more of its operating companies to the public, a spokesman for the company said by email. Olayan Financing manages more than 40 companies in the Middle East, including the regional Burger King franchise, according to its website.
An IPO would be the first time Olayan Financing has sold shares in one of its Saudi businesses since at least 2000, and comes as the kingdom tries to transform itself into a financial powerhouse by expanding the local stock market, taking the state-owned oil producer public and creating the world’s largest wealth fund. Founded by Suliman Olayan in 1947, Olayan Group was valued at more than $10 billion by the Bloomberg Billionaires Index in 2015.
“Many of the family conglomerates are very well run and represent parts of the private sector that for too long have been withheld from a public listing,” said John Sfakianakis, director of economic research at the Gulf Research Center. “This ties in with government efforts to open up more opportunities to investors, and help bring more foreign investment into the country.”
Olayan Financing is also considering setting up a holding company for some of its assets and may take that public, according to people familiar with the plans. The company is already in talks with potential financial advisers for the potential offering, which could happen as early as 2018, the people said, asking not to be identified as talks are private.
A listing of a holding company would be the first such move in Saudi Arabia by a family group, according to Sfakianakis. Final decisions on which entities may be listed haven’t been made and the plans could change, the people said.
Olayan Group, which manages the family’s international business, is the largest shareholder in Credit Suisse Group AG with a 5.1 percent stake, according to data compiled by Bloomberg. The group also owns global real estate assets including 550 Madison Avenue in New York City, the Knightsbridge Estate in central London and residential buildings in Paris’s 8th arrondissement, according to its website.
Olayan Financing, run by the founder’s daughter and former JP Morgan Chase & Co. analyst Lubna Olayan, is one of the country’s biggest makers of tubular oilfield equipment through a joint venture with The Weir Group. Their food division is the master franchise-holder for Burger King in the Middle East and North Africa. They manufacture aluminum, steel and plastics while also being the local producer of Kleenex, Coca-Cola and Huggies diapers.
A listing of one or more local assets would tie in with plans by the government to boost the size of the Tadawul, as the Saudi stock market is known. At the beginning of 2016, stock exchange regulator the Capital Market Authority started a campaign with family-owned firms and large companies to promote the benefits of listings, Yarub Awadh Albadi, head of initial public offerings at the Capital Market Authority, said Tuesday during a conference in Dubai.
Almost two years after Saudi Arabia eased access to its exchange, the kingdom is changing the rules to attract more foreign capital. Total foreign ownership of Saudi stocks is about 4 percent. The country is also aiming for inclusion in MSCI Inc.’s emerging-market index to boost foreign ownership.