Saudi Almarai eyes $500m sukuk sale
Riyadh, May 8, 2013
Saudi Arabian dairy producer Almarai Co plans to raise at least $500 million from the sale of a debut international Islamic bond to help to finance ambitious growth plans, a senior executive said on Wednesday.
The company, which is the Gulf's largest dairy firm, has previously sold two Islamic bonds (sukuk) in local currency, open only to Saudi institutional investors.
"We're looking at how to get financing internationally. We're targeting at least $500 million and this should be out in the next 12 months," Paul Louis Gay, Almarai's chief financial officer, told reporters.
The company aims to invest SR3 billion ($800 million) annually in the next 5 years, Gay said.
"Proceeds will be used to finance our growth, mainly factories, distribution capabilities and farms."
Gay said the structure of any eventual issue was still under consideration, but the company could opt for a hybrid sukuk.
Hybrid structures are rare in the region, although two banks in the United Arab Emirates have tested markets with hybrid sukuk since last year. Hybrids are usually accounted for as subordinated debt on a company's balance sheet, and contain some equity characteristics.
Traditionally, Saudi companies and other entities have relied on bank loans and retained earnings to finance their expansion. But many are now diversifying their financing requirements into bond markets.
Despite a burst of riyal-denominated debt issuance, globally-marketed bonds or sukuk remain rare, and therefore are likely to attract strong investor appetite.
U.S. dollar sukuk issues from Saudi Electricity Co in 2012 and earlier this year were multiple times oversubscribed, although borrowers do have to be prepared to pay a higher profit rate to issue international bonds as well as comply with more stringent disclosure requirements.
Almarai reported a first quarter net profit of SR255 million, up 5.4 per cent over the prior-year period, due to increased revenues, particularly in poultry sales.
Shares in Almarai are up about 3 percent so far in 2013.-Reuters
More Miscellaneous Stories
- Girl, 9, dies after fall from 8th floor in Abu Dhabi
- Lebanese café brand opens Dubai outlet
- Bahrain poultry firm told to step up safety
- Customer dies in Bahrain cafe brawl
- Bahraini boys hurt while planting bombs
- Philips, Ericsson launch LED street lighting
- DuBiotech to set up first Halal safety lab
- Jotun to supply coatings for Makkah Station
- Raytheon wins $655m Kuwait Patriot deal
- Alwaleed Foundation lights up 3 Saudi villages
- Poultry farms strike may trigger shortages in Bahrain
- Oman seals Victoria food security pact
- Saudi woman, 80, donates $133m to charity
- New Saudi clamp on energy drinks
- Outrage follows Bahrain killer bomb
- Improvised explosive device used in Bahrain attack
- 3 policemen killed in Bahrain blast
- Dammam-Al Ahsa train service starts
- Egypt wheat supplies enough to last until June
- Expat killed at Saudi workers' holding facility
- 80 global speakers for Doha summit on family
- Restaurant runs up $47,555 phone bill in 4 days
- NZ minister to visit Gulf states
- Public-private tie-ups ‘vital for agri growth’
- China firm wins solar power project in Amman
- 15,000 attend Bahrain garden show
- Omani firms shine at top food expo
- Bahrain to set up national food company
- Dozens hurt in gas leak at plant near Doha
- Twelve dead in Qatar restaurant gas explosion