Construction Products Holding Co (CPC), Saudi Arabia’s
largest manufacturer of building materials and a unit of Binladin Group, is
planning an initial public offering (IPO) and will soon mandate banks for the
potential share sale, sources said.
Pitching meetings have taken place in the kingdom and the
company is due to appoint a financial adviser for the offering, as well as lead
managers and bookrunners, by the middle of next month, according to two bankers
with knowledge of the matter.
About 30 percent of the company has been earmarked for
public sale, one of the sources said, with a potential IPO taking place on the
Saudi bourse Tadawul in either 2012 or 2013.
The value of the IPO will be determined by a bookbuilding
process, the source added, although its large size will likely require
“two, possibly three banks” to underwrite it.
The underwriting banks will be appointed closer to the time,
although they are likely to be the same institutions that are mandated to
advisory and lead manager roles, the source said.
The sources declined to be identified as the talks have not
yet been made public. Saudi law requires IPOs to be underwritten before their
launch.
The pipeline of companies looking to list on the Tadawul
exchange is said to be sizeable but unfavourable market conditions have meant
that the number of IPOs launching has been limited.
Hail Cement Co, the third public offering of 2011 in the
kingdom, is due to complete on Monday. Hail is looking to raise SR489.5m
($130.5m) in a 50 percent offering through local investment bank GIB Capital.
Equity markets are a popular source of funding for Saudi
companies, given the nascent bond markets and a slowdown in bank lending in the
kingdom, and this is likely to draw a number of large private companies to list
as they look to fund expansion plans, bankers say.
“The equity market is huge and companies want to enter
it,” one of the bankers said. “We are now seeing companies that the
public have long waited to list beginning their preparations, including the
likes of CPC.”
CPC provides up to 80 percent of the building materials
required for construction projects in Saudi Arabia and has more than 30
manufacturing facilities across the kingdom.
Last month, Standard Chartered said its private equity arm
had brought a minority stake in CPC for $75m, its first investment in Saudi
Arabia.
Saudi Arabia has said it will spend $400bn in the five years
to 2013 to improve its infrastructure.
Binladin Group is one of the largest construction firms in
Saudi Arabia and was appointed last month to construct the SR75bn ($20bn)
Kingdom Tower in Jeddah, which is slated to be the world’s tallest building.
CPC was not available for comment outside business hours in
Saudi Arabia, which is closed for the weekend.
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