Saudi Grains looks to hire banks for restructuring

12 April 2016

The state-owned company could sell shares on Tadawul post business reorganisation

Saudi Grains Organisation, a state-controlled grain silos and flour mills operator in kingdom, has invited banks to pitch for an advisory mandate to help it restructure the business and possibly float its shares on the Saudi Stock Exchange (Tadawul), according to sources familiar with the matter.

The request for proposals went to several local, regional banks, according to the sources, who asked not to be identified as the information is private. The company is in the process of shortlisting the banks, one of the sources said.

The company which could be valued north of $1bn intends to either sell a stake to strategic investor or raise funds through a public float next year, once its organisational restructure is completed, the sources said.

A company spokesman could not be reached via phone and did not respond to an emailed request for comment.

Saudi grains is the latest among Saudi government-related entities mulling privatisation, which is a part of the Riyadh’s broader economic reforms agenda. The kingdom has identified about 146 state assets that could be privatised or sold to the public as Opec’s largest oil producer looks to monetise assets to meet budget shortfalls amid low oil prices and shrinking revenues.

Saudi Arabia, the biggest GCC economy, which expects a SR326bn ($87bn) budget deficit in 2016, plans to create the world’s largest sovereign wealth fund for the kingdom’s most-prized assets, including the oil giant Saudi Armaco, according to Deputy Crown Prince Mohammed bin Salman al-Saud’s interview with US-based news agency Bloomberg.

The kingdom is mulling to sell less than 5 per cent shares in Aramco’s parent company in an IPO as soon as next year or in 2018 and transfer the remaining ownership to Public Investment Fund (PIF) to inflate its size to about $2 trillion.

State-controlled Saudi Electricity Company (SEC) is already undergoing a restructuring programme. This involves the creation of four generation companies, an independent system operator, and separate transmission and distribution companies, which will lead to potential IPOs of the new subsidiaries, Abdullah al-Shehri, governor of Saudi Arabia’s Electricity & Cogeneration Regulatory Authority (Ecra), told MEED in an exclusive interview.

Riyadh is also considering plans to turn Saudi Ports Authority into an autonomous body, which will enable the port operator to independently raise funds through the debt market or float its shares on the Saudi Stock Exchange (Tadawul), three sources familiar with the situation told MEED on 1 March.

Saudi Grain is at the forefront of 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 throughout 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 across Saudi Arabia, according to the company website.

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