September 12, 2019 / 10:01 AM / 2 months ago

Saudi retailer BinDawood asks banks to pitch for IPO - sources

* Group owns BinDawood, Danube supermarkets

* Saudi Arabia is encouraging family-owned firms to list

* Government wants to deepen capital markets

By Hadeel Al Sayegh

DUBAI, Sept 12 (Reuters) - Saudi Arabian retailer BinDawood Group has asked banks to pitch for roles in a potential initial public offering (IPO) of its supermarket business, two sources told Reuters, in a deal which may raise around 1.5 billion riyals ($399.9 million).

The group, which owns the Danube and BinDawood supermarket brands, has hired Moelis as an independent financial advisor, said the sources, who declined to be named because the talks are private.

The group aimed to appoint two joint global coordinators, one local and one international, and wanted to list on the Riyadh stock market at the beginning of 2020, the sources said.

Family-owned BinDawood and Moelis did not immediately respond to requests for comment.

One of the sources said the company’s supermarket business was worth some 5 billion riyals, which suggests an IPO size of about 1.5 billion riyals ($400 million). A second source said the company was looking to raise about $500 million.

According to its website, BinDawood has “a multi-billion dollar 2018 fiscal year revenue”.

Saudi Arabia is encouraging more family-owned companies to list in a bid to deepen its capital markets under reforms aimed at reducing the kingdom’s reliance on oil revenues.

Private equity firm Investcorp acquired a minority stake in BinDawood Group in 2016. Should an IPO go ahead, it could become the third Saudi investment that Investcorp has exited through a public share sale in the last five years.

It took L’Azurde Company for Jewelry public in 2016 and gym fitness chain Leejam Sports last year.

Investcorp declined to comment.

The BinDawood supermarket chain is focused on the mid-range customers and Muslim pilgrims in the kingdom, while the Danube chain is focused on wealthier customers.

The group, which owns both brands, manages 70 hypermarkets and supermarkets in major Saudi cities including Makkah, Medina, Jeddah, Riyadh, Khobar and Dammam, its website said.

The Saudi stock market, which has completed the second and final phase of joining the MSCI Emerging Markets Index this month, is expected to see a slew of companies go public over the next year.

State oil giant Saudi Aramco, which selected nine joint global coordinators this week, is slated to list on the local market before the end of the year, sources said.

Another possible listing this year is by Sulaiman Al Habib Medical Group, one of the biggest hospital operators in the Middle East, which is considering an IPO that could value the company at $2.5 billion, according to sources.

Saudi mall operator Arabian Centres, owned by Fawaz Alhokair Group, raised $747 million this year through the sale of a roughly 20% stake, the first listing in the kingdom under Rule 144a which allows the sale of securities primarily to qualified institutional buyers in the United States.

$1 = 3.7508 riyals Reporting by Hadeel Al Sayegh; Editing by Edmund Blair

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