Saudi Developer’s $336M IPO Draws $36B in Orders

A Saudi builder just set the bar for IPO demand in the Gulf.

Dar Al Majed Real Estate Co., better known as Almajdiah, pulled in the equivalent of roughly $36 billion in orders for its $336 million IPO on the Saudi exchange, pricing shares at the top of the marketed range, Bloomberg reported. Shareholders are offloading a 30 percent stake, or 90 million shares, implying a $1.12 billion valuation for the Riyadh-based residential developer.

Institutional investors swarmed the offering, oversubscribing the tranche by a staggering 107 times. Demand reportedly cleared the full book within minutes of launch. Sinad Holding is anchoring the deal with a commitment to more than 2 percent of Almajdiah’s capital. Retail investors get their turn in a week.

The frenzy is the latest signal that Saudi Arabia’s loosening real estate policies are gaining traction. Almajdiah, which focuses on residential communities in Riyadh, is poised to benefit from Vision 2030 goals to expand homeownership and a new law allowing foreigners to buy in designated areas.

“Local developers, especially those with a strong land bank and that have active projects in tier-1 cities, stand to benefit significantly,” said Prasad Chari of Emirates NBD Capital.

BSF Capital is arranging the offering. Founded in 1999, Almajdiah has kept its focus squarely on Riyadh, but that may change if the IPO war chest is used to scale up.

The flood of capital comes amid a broader revival in Saudi IPO activity, even as performance has been uneven. Despite raising more than $3 billion so far this year, several recent debuts — like airline Flynas and hospital operator Specialized Medical Co. — are trading below their offer prices, weighed down by market jitters over valuations and soft oil prices.

Still, investor appetite for real estate plays seems durable. Almajdiah’s blockbuster IPO follows regulator sign-off for fellow developer Al Ramz to list, as well as a pending $109 million raise by materials supplier Marketing Home Group.

— Holden Walter-Warner