By: Mahmoud Salah El-Din
Mubasher: The recently announced initial public offering (IPO) of Amlak International for Real Estate Finance is part of the company’s strategy since its inception, especially as it is achieving strong growth, according to CEO Abdullah bin Turki Al Sudairy.
In a recent interview with Mubasher, the CEO said that the IPO provides an opportunity for more investors to be introduced to the non-banking finance institutions.
The IPO could also help the company improve its exposure, and reduce the future capital cost, simultaneously, while continuing to offer services to a growing diverse group of clients, Al Sudairy emphasized.
Discussing the timing of the IPO, the CEO said that despite the impacts of the coronavirus (COVID-19) pandemic, the Saudi capital market is stabilising, noting that the company’s board is convinced that the IPO and the company’s performance on the stock market will be supported by its strong activity and sector.
“We are sure the timing is right for the IPO, giving the performance that we achieved over the past years, with the support of the sector’s attractive dynamics that was approved by the Saudi Vision 2030. We also view the macroeconomic and the long term demographic factors as suitable,” he added.
Amlak’s “finance portfolio reached SAR 3.3 billion in the first quarter (Q1) of 2020, of which 31% is for individuals, while 69% is for companies. As the company dominates 28% of the Saudi real estate finance portfolio among non-banking entities, we control 1% of the entire sector. This gives us a large space for growth in the retail and corporate finance areas, as we seek to maintain healthy and stable growth in our activity.”
Speaking about the effects of COVID-19 on the real estate finance in general and Amlak in specific, the CEO said that the sector’s fundamentals have not changed, especially when it comes to demographics, despite the short-term economic risks such as oil price fluctuations, which is affecting all sectors.
Amlak is applying a flexible work system that allowed to easily move to work remotely without delays in providing our services during the curfew, with the effect on earnings being very minimal as most of the company’s portfolio involves long-term contracts, the CEO explained.
Al Sudairy further expected the sector to double in size within a decade, recording a compound annual growth rate (CAGR) of 8.7% over the next ten years, supported by the strong government support. He also forecasts that real estate finance will account for 15% of the Saudi gross domestic product (GDP) this year, thanks to the strong demand from individuals and corporates alike, including real estate developers.
When asked about expanding in new markets and adding new finance activities, the CEO said that Amlak is currently focusing on its real estate finance activity in the Saudi market, following a selective policy in choosing markets and activities, especially at it views huge opportunities for local growth.
The company is looking forward to attracting more finances, he noted, adding that the company enjoys a strong working capital and many unused credit lines that provide sufficient support to grow its portfolio.
It is worth noting that Amlak International for Real Estate Finance has recently unveiled its plan to offer a total of 27.18 million ordinary shares through an Initial Public Offering (IPO) on the main market of the Saudi Stock Exchange (Tadawul).
In addition, the company has set a price range of SAR 15-17 per share, with the book building process to take place from Monday, 22 June, to Monday, 29 June 2020.