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Tue 12 Jan 2010 12:14 AM

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Saudi based Herfy starts $110m IPO

Company offering 8.1m shares at IPO while Savola Group's stake will drop to 47.6%.

Saudi based Herfy starts $110m IPO
NO PROCEEDS: Herfy, the Saudi based fast food company has said that it will not receive any proceeds from the IPO and that the money will go to existing shareholders. (Getty Images)

Saudi fast food chain Herfy Food Services Co began on Monday an initial public offering to raise $110.2 million which will go to exisiting shareholders.

Herfy is offering 8.1 million shares, equivalent to 30 percent of its capital, at $13.5 per share, its listing prospectus showed. Subscription closes on January 17.

Savola Group, the Middle East's biggest edible oil manufacturer and sugar refiner, said it would net a capital gain of $53.3 million from the offering which will show on its earnings for the first quarter of 2010.

Savola's stake in Herfy will drop to 47.6 percent after the IPO from 68 percent while that of Herfy's founder - Ahmad al Said - will fall to 20.3 percent from 29 percent, the prospectus showed.

The prospectus said: "The company (Herfy) will not receive any of the proceeds from the IPO."

Herfy was set up in 1981 with a capital of $399,978 and currently has a paid up capital of $71 million.

By mid June last year, Herfy had 184 restaurants in Saudi Arabia and 12 in Bahrain, Egypt, Kuwait and the UAE.

It also owns 16 bakery production units as well as one meat processing plant.

Its net profit in 2008 rose to $24.34 million from $16.42 million a year earlier, while turnover increased to $124.39 million from $99.99 million in 2007.

During the first half of 2009, Herfy made a net profit of $14.69 million on sales of $67.88 million, up from respectively $11.70 million and $60.45 million during the year earlier period. (Reuters)

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