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Al Kifah Building Materials Company plans IPO in ’07

JEDDAH — The Al Kifah Building Materials Company Ltd. plans to make an initial public offering (IPO) early next year upon approval by the Capital Market Authority (CMA).

About the amount the company intended to offer as IPO, Sulaiman Al Afaliq, Chairman of the company, explained that according to the Ministry of Commerce and Industry regulations, any company offering its shares to the public has to offer 30 per cent of its capital.

He said that Al Kifah could offer shares amounting to between SR1 billion to SR2 billion, and added that the Saudi Hollandi Bank (SHB) had been appointed as its financial adviser and arranger.

The agreement was signed in Riyadh on Tuesday. The ceremony was attended by Al Afaliq and SHB Managing Director Giel-Jan van der Tol. Also present on the occasion were Abdullah Al Shaikh, General Manager of corporate banking at SHB, and Saleh Al Afaliq, vice chairman of Al Kifah.

Sulaiman Al Afaliq said that the decision to apply for public listing was based on the company's strategy to broaden and strengthen its shareholder base and access the capital market so as to be able to fund its expansion plans.

He said that a successful IPO would reflect well on the company's structure and competitive position. "We intend to leverage our industry relationships to achieve superior returns for our shareholders," he added.

Saleh Al Afaliq said that because of the boom in the real estate market in the Kingdom, the company registered a 50 per cent increase in its profits in 2005 alone.

Al Shaikh said it would be unnecessary to restructure the company for the IPO. He explained that it usually takes up to six months for a bank to assess whether a company needs restructuring or not when it offers its share for IPO.

This is based on the information and studies it conducts regarding its diversification, activities, sister companies, and the like.

Al Kifah was established as a construction company by its founder Hassan Al Afaliq in 1973. It was the first company in the Middle East to build a concrete factory.