Saudi contractor and cement firm to launch IPOs

Jeddah has seen some of the infrastructure spending from the government.

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Saudi contractor Abdullah A.M Al Khodari Sons Company (KSC) and Riyadh-based Al Jouf Cement Company will issue initial public offerings totaling 77.75 million shares.

The two companies are looking to restructure their businesses to capitalise on the boom in construction in Saudi Arabia following the launch of a number of mega projects around the country.

KSC, one of the largest construction companies in Saudi with a focus on the Eastern province, will issue 12.75 million shares, equivalent to 30% of the company. The offer will run from 4th October to 10th October later this year.

In 2006 the company, which is based in Al Khobar, was named one of the top 200 companies in Saudi Arabia. Its sectors include civil, industrial, commercial and residential buildings, and institutional sectors throughout in various cities of Saudi Arabia and the Middle East.

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Al Jouf Cement Company, a Riyadh-based closed joint stock entity, will issue the equivalent of half its total outstanding shares. The offer price for the 65 million shares will be SR10 per share and will run from 7th July to 13th July.

The company manufactures Portland cement and sulphate resistant cement (SRC) both retail and wholesale. Its business focus is the northern borders region and the neighboring regions inside and outside the Kingdom. Its market capitalisation is SR1.02 billion.

Both company’s prospectus will be posted to the public prior to the subscription period by a sufficient time, according to the Capital Markets Authority. The prospectus includes all relevant information that the investors need to know before making an investment decision, including the company's financial statements, activities and management.

Contractors and cement firms from the Kingdom have posted some of the biggest net profits in the GCC so far this year. The country has been largely untouched by the regional slowdown in construction and the clamour to be in the market from Middle Eastern and Far Eastern companies is at a high.

Domestic demand for cement and other materials as a result of the billions of riyals invested by the government in infrastructure has brought along with it conditions that have disincentivised exports.

Analysts say that cement companies must satisfy three conditions when selling across the country’s borders: firstly, that it must sell one bag domestically for every bag exported; secondly that it must ensure its local market is well served; and thirdly, that it keeps 10% of stock in store in case of fluctuations in price.

Al Jouf is the latest company to step up its efforts to capitalise on demand. Gulf Cement Company, a Riyadh based firm which is listed but yet to come on-line, is scheduled to open a 5,000 tonne-capacity plant in the next three years. It is already in talks with European and domestic clients.

Both companies were not available for further comment.