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Alwaleed IPO Oversubscribed Despite Islamic Edict - ASHARQ AL-AWSAT English Archive
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RIYADH, (Reuters) – A share offering by Prince Alwaleed bin Talal’s Kingdom Holding attracted more than double the amount the billionaire wanted as over 1 million Saudis ignored religious edicts against the sale.

Saudi retail investors and institutional investors offered 8.53 billion riyals ($2.3 billion) for the 5 percent stake in Kingdom Holding.

More than 1.25 million Saudis applied to buy shares in the initial public offering of 315 million existing shares at 10.25 riyals each, valuing the company at $17.2 billion.

Some clerics had issued edicts to discourage investors from buying shares in Kingdom, saying the company’s investments in hotels and banks violated Islam’s ban on usury and alcohol.

Similar denunciations have had little impact on previous Saudi initial public offerings.

“The response has been strong,” Prince Alwaleed said in a statement on Sunday. The nephew of King Abdullah was looking to raise 3.23 billion riyals in the offering, which closed on Wednesday.

The statement did not provide details on the demand for the retail tranche of the IPO. Half the total offering was to retail investors and the other half to institutional investors.

Kingdom’s IPO was priced at around 67 times 2006 earnings, more than four times the average for the Saudi bourse, on which it will be the fifth-largest stock.

Prince Alwaleed’s stake in Kingdom, which had $24 billion in assets at the end of 2006, will fall to 93.5 percent after the sale. His son and daughter are also shareholders.

The Kingdom offering attracted a smaller number of investors than other recent IPOs have done, however.

More than 1.3 million Saudis bought shares in Printing and Packaging Co.’s $105.6 million listing, which closed 36.4 percent oversubscribed this month.

A $537 million IPO in June by Jabal Omar Development Co., which is developing property projects near holy shrines in Mecca, attracted more than 6.2 million Saudis, who offered two times more cash than the firm was seeking.

Last August, Emaar Economic City , which is spearheading the development of a giant economic city on the Red Sea coast, set a new record when 10 million Saudis applied to buy shares in its $680 million IPO.

Alwaleed has made billions of dollars by investing in underperforming companies and is the world’s 13th-richest person, according to Forbes magazine.

The billionaire grandson of Saudi Arabia’s founder took his company public after a stock market crash halved the value of the Saudi bourse last year and diminished the appetite for IPOs in the world’s biggest oil-exporting region.

Prince Alwaleed is Citigroup Inc.’s largest individual shareholder. Kingdom Holding’s portfolio includes shares of Time Warner Inc. , Apple Computer Inc. , Motorola Inc. and News Corporation Inc. as well as Savola Group ,the Gulf’s largest food company by market value.

The Saudi index dropped 52.53 percent last year and is off 5.4 percent so far in 2007, making it the worst performer among 13 Arab benchmarks tracked by Reuters.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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