EXCLUSIVE: Market waits for Saudi Grains privatisation

11 October 2017
Prequalification process had been expected to begin earlier this year

Saudi Grains Organisation, a state-controlled grain silos and flour mills operator in the kingdom, has still to begin the prequalification process for its privatisation of its milling operations.

The grains company had planned to initiate the process by the end of June, but it has since fallen behind schedule and no indication has been given to interested parties on when the prequalification process will begin.

As part of the privatisation programme, Riyadh has split the company’s milling operations into four special purpose vehicles (SPVs), which currently remain under the ownership of the sovereign wealth fund Public Investment Fund (PIF). The government will sell 100 per cent equities in all of the four SPVs.

MEED reported in May 2016 that Saudi Grains had appointed UK-based HSBC as financial and transaction adviser on the scheme, with the UK’s Trowers & Hamlin having been appointed as legal adviser.

Saudi Grains is at the forefront of the kingdom’s food security programme. It procures wheat and other grains from international suppliers, and controls production and distribution of wheat, flour and animal feed across Saudi Arabia. The company owns and operates 12 flour mills and five animal feed production facilities. Its grain storage silos are spread across 13 locations in the country.

Saudi Arabia has become a major importer of hard and soft wheat since abandoning plans for self-sufficiency in wheat in 2008, as farming in the desert drained scarce water supplies.

Saudi Grains has said demand for wheat in the kingdom is expected to grow at an annual rate of 3.2 per cent to reach 4.5 million tonnes a year by 2025, largely due to population growth. The state grain agency is expected to import about 3.5 million tonnes of the grain in 2016.

 

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