Saudi Arabian Mining, the Gulf kingdom's biggest gold producer, soared as much as 60 per cent in Riyadh on its first trading day after a US$2.47 billion (Dh9bn) initial public offering (IPO) to raise capital for expansion. Shares in Ma'aden, as the Riyadh-based company is known, rose to 30 Saudi riyals (Dh29.39) in afternoon trading after jumping to as much as 32 riyals. The company sold shares at 20 riyals each earlier this month.
"There's enormous interest in anything commodities-related," Giyas Gokkent, the head of research at National Bank of Abu Dhabi, said yesterday. "As is usual with Saudi IPOs, the stock was also priced to be very attractive." The former state-owned company on July 14 closed its IPO a day after saying sale managers JPMorgan Chase and Samba Financial Group had already received bids for more than the 462.5 million shares on offer.
Saudi Arabia's Capital Markets Authority in May approved Ma'aden's plan to sell a 50 per cent stake to the Saudi public as the company sought funds to help it expand into fertilisers and aluminium. For the government, the sale is a means to share state wealth with the people and try to reinvigorate the kingdom's benchmark Tadawul stock index, which has slumped 20 per cent this year. Halwani Brothers, the food processor based in Jeddah, jumped 54 per cent on its first day of trading on July 16. Alinma Bank, the start-up Islamic bank that raised $2.8bn in an April share offering, climbed 60 per cent on its first day of trading on June 3 as the stock opened to some foreigners excluded from the IPO.
Saudi Arabia in 2006 allowed foreigners living in the kingdom to trade stocks, and in September said it would permit citizens of neighbouring Gulf countries to trade on its bourse freely, removing limitations on banking and insurance stocks. Other foreigners may only invest in Saudi shares indirectly through mutual funds. Ma'aden and its partner, Saudi Basic Industries, last month agreed to $2.76bn of loans to help finance a new phosphate mine and fertiliser plant that is planning to open in 2010.
Those loans and capital raised from the IPO "move us much closer to seeing this project become a reality", Abdallah Dabbagh, the chief executive of Ma'aden, said on June 16. The cost of an aluminium smelting project with Rio Tinto Group soared 50 per cent, to $10.5bn, and production will be delayed by a year to 2012 after a redesign and delays to the construction of a supporting power plant, Abdullah al Fallaj, the vice president of finance at Ma'aden, said in May.
* With agencies