Americana, a quick service restaurant group which has good coverage in the MENA (Middle East, North Africa) region is a staggering 58 times oversubscribed as it heads for listing on two Middle East bourses, the UAE and Saudi Arabia. It is being priced at the higher end for the IPO at Dh 2.62 in the UAE market and 2.68 Saudi riyals in Saudi Arabia.
Demand from retail investors in the region and overseas has been reported as extreme, with Americana doubling the size of its retail allocation in the UAE market. Some 30% of issued share capital is up for grabs, which gives it a valuation of USD 6 billion. This is a chunky retail IPO for a regional economy dominated by energy companies, but demonstrates the value of a good retail brand when you hit the IPO trail.
In the Saudi listing it has also been reported that the retail allocation has been increased – at the expense of the institutional allocation – to meet popular demand. The shares are being sold by Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, and Dubai businessman Mohamed Alabbar. It is the biggest Saudi IPO of the year.
What you need to know about Americana
- Founded in Kuwait in 1964
- Introduced fast food into the region in 1970
- Largest out of home dining operator across 12 countries including Kazakhstan
- Operates the Pizza Hut and KFC chains in the region
- Robust dividend policy planned
The IPO’s success story reflects the increased wealth within the Gulf region. There were a staggering 24 IPOs in the UAE in the first six months of this year, making it the biggest IPO market in the region in terms of aggregate value. Saudi Arabia still leads in terms of total value. But the fact that $18bn has been raised through Middle East IPOs so far this year cannot be ignored. The local market seems to have been transformed since the epic Saudi Aramco listing in 2019.
Part of the attraction of the Americana IPO seems to stem from the dividend policy. The company said it would make a partial dividend distribution of 75% of its net profit (attributable to the parent company) for 2H of this year. It will pay a cash dividend in the first half of next year. From 2023 it plans to maintain an annual distribution policy, with a minimum of 50% of its profits being paid out to shareholders.
Interestingly, Americana will be the first company to have its stock available on both the Riyadh and Abu Dhabi exchanges. It could blaze a trail for future big scale listings in the region. Shares are expected to start trading on 6 December. Full data on allocations to investors will be provided on 28 November.
While the European market for IPOs remains relatively quiet, the Asian market has continued to see some punchy IPOs hitting the market. Access to the local market is best achieved through one of the larger brokers which have a trading license already in either the UAE or Saudi Arabia. Bigger international brokers like HSBC and IG already have a UAE presence and can advise clients on future allocations of local IPOs.