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Saudi’s Tadawul ready for IPO bonanza, but Nomu is no chump exchange

Jahez International Company, Saudi’s leading online food delivery platform, recently celebrated the listing of its shares and start of trading on the Saudi Exchange’s Parallel Market Nomu

The offering consisted of 1,888,523 shares representing 18% of the group’s share capital Saudi’s TASI ended lower last January 6 as the rise in COVID-19 cases of the omicron strain spooked investors Saudi’s stock exchange Tadawul has 50 applications from companies for  IPOs in 2022

Jahez International Company, Saudi’s leading online food delivery platform, recently celebrated the listing of its shares and start of trading on the Saudi Exchange’s Parallel Market Nomu, following the successful completion of its initial public offering (IPO).  

Jahez is a homegrown Saudi business that utilizes disruptive technology to connect over 1.3 million active users with its platform’s network that includes over 12,000 merchant branches and more than 34,000 delivery partners in 47 cities across Saudi Arabia as of March 31, 2021.

Prince Mishal bin Sultan bin Abdulaziz Al Saud, Chairman of the Board of Directors at Jahez said: “This achievement is one of the benefits of public-private sector collaboration. Being the first homegrown Saudi technology start-up to list on Nomu represents the next step in the growth journey of Jahez and the sector in general.”

The offering consisted of 1,888,523 shares representing 18% of the group’s share capital post the offering, in addition to allocating 204,590 over-allotment shares to institutional qualified investors to implement the price stabilization mechanism.

Image source: Arab News

85.6% of the offering was allocated to institutional qualified investors and 14.4% allocated to individual qualified investors. The IPO was 38.8x and 5.9x oversubscribed, generating demand of $16.1 billion and $378 million, respectively. The final offer price for the offering had been set at 850 Saudi Riyal ($229.5) per share, implying a market capitalization of $2.4 bn at listing.

The group demonstrated tremendous growth since the launch of the Jahez platform in 2016, with orders delivered through Jahez exceeding 68 million, with 36 million orders delivered in the first 9 months of 2021 alone, totaling $864 mn of adjusted gross merchandise value including VAT and delivery fees.

The IPO of Jahez, which began last December, was Nomu’s biggest in 2021. Jahez jumped more than 10% on its stock market debut. The share price of the food company reached $250 recently. Over 434,200 shares changed hands during the session.

TASI struggles

Saudi’s main stock index, TASI, ended lower last January 6 as the rise in COVID-19 cases of the omicron strain spooked investors.

The Saudi Health Ministry confirmed 3,045 new COVID-19 cases a day earlier, up from only 34 on December 1, 2021.

Image source: Arabian Business

Global cues also pushed TASI and regional indexes lower. US Fed’s minutes flagged a chance of lifting interest rates earlier than expected amid a tight job market and high inflation, Reuters reported.

TASI was dragged lower by falls in some of the Kingdom’s highest valued companies, including Al Rajhi Bank, SABIC, oil giant Aramco, all of which traded in the red zone.

TASI edged down by 0.2% to close for the day at 11,431 points, while the parallel market Nomu added 1.1% to 25,618.

On Nomu, gains were attributed to Saudi IT firm Advance International Co., or AICTEC, which led the gainers on its first-day trading, rising 30% to $38.

In energy trading, Brent crude rose to near $82 per barrel.

Tadawul and IPO listings

Saudi’s stock exchange Tadawul has 50 applications from companies for  IPOs in 2022 and is considering whether to allow SPACs, or special purpose acquisition companies, to list.

Khalid al-Hussan, the CEO of Tadawul, said the exchange was discussing business models and assessing appetite for SPACs in the kingdom, but added that no legal framework had been proposed as yet.

“We are looking very closely to this recent development (about SPACs) and we absolutely look forward to add this element to our market,” Hussan said.

“We have to make sure that this vehicle is in demand by the investors as well as by the issuers,” he added.

Image source: Reuters

Tadawul’s own listed shares opened at $30.76, almost 10% above its listing price in its Riyadh debut.  

The bourse, which raised about $1 bn through an IPO, priced its shares at $28.35 each.

Saudi Arabia’s equities index was up 27% by December 2021. Tadawul’s share sale was the country’s second biggest offering after ACWA Power International, which raised $1.2 bn from investors.

Hussan said about 20% to 25% of the 50 public share sales slated for the market in 2022 were to list on the main board.