Move by Construction Products Holding could pave way for more listings by family firms in Gulf kingdom
Saudi Arabia's Construction Products Holding (CPC) is planning an initial public offering (IPO) within months, possibly paving the way for more listings by family-controlled Saudi companies.
"The IPO is happening before June this year. The plan is to float 30 percent," Mutaz Sawwaf, CPC's chief executive, told Reuters late on Wednesday on the sidelines of the World Economic Forum in Davos.
The building materials and services company, which has annual sales of about SR10 billion ($2.7 billion), is part of the Saudi Binladin Group, the country's biggest construction company. Binladin Groupis controlled by the bin Ladin family, one of the top Saudi business dynasties.
More than 80 percent of the businesses in Saudi Arabia are family-owned or controlled, consultancy PwC estimates. Saudi authorities, seeking to modernise the financial markets and diversify the economy beyond oil, want more of these businesses to list on the stock market.
A listing by a major Binladin Group company could lure more family businesses to the market. There were only five IPOs in Saudi Arabia last year, raising $507 million. That was down from seven in the previous year, worth a combined $1.4 billion.
CPC has been considering an IPO since 2011; the year that Standard Chartered's private equity arm bought a minority stake for $75 million.
"The delay was mainly because we're always buying companies and every time we do that we have to refile (IPO plans)," Sawwaf said, adding that GIB Capital and Samba Capital are advising CPC on the IPO.
Sawwaf did not indicate how the funds raised will be used, but like many big Saudi companies, CPC is expanding abroad after outgrowing its domestic market. Sawwaf said that it plans to develop the business across much of the Arab world.
"We are expanding hugely in Egypt," he said. "We are studying opportunities to buy factories there and we're opening four factories for building materials, which will be operational by July."
CPC is also negotiating the purchase of an industrial park in Iraq and has opened an office in Algeria, where it is in talks with the government to acquire industrial land. The company will open a third Qatari factory in June or July, Sawwaf added.