Big Saudi pharma choosing an IPO growth strategy
Two huge Saudi IPOs in the pharma sector will take place starting this March: Nahdi Medical and Al-Dawaa.
A mega IPO-filled 2021 is paving the way for large companies to sell shares on the Saudi bourse
Saudi Arabia’s largest pharmacy chain plans Nahdi Medical plans on enlarging its core healthcare business and going the IPO way on the Saudi Stock Exchange (Tadawul) to achieve that, according to Bloomberg.
The chain chose to float up to 30% of its shares and has hired HSBC Holdings and Saudi National Bank to manage the sale.
The company that brands itself as being minutes away from 90% of Saudi’s population is today aiming to develop the UAE market, even if that means acquiring local companies there.
Reflecting a 3-year compound annual growth rate of 8.4%, Nahdi Medical, which serves over 100 million customers, reported net profits of $226 million in 2020, on revenues of $2.32 bn, a filing in the Saudi bourse revealed.
It also operates express clinics, as well as an online platform with over 2 million users, making about 200,000 deliveries per month. The company is looking to increase its express clinics by 43 more locations and add two pilot lab satellites in Q1 2022.
The company grabbed a 31 percent market share of total pharmacy sales in the Kingdom in 2021. It operates over 1,150 pharmacies across the Kingdom, with 5 stores in the UAE and a growing presence there.
Nahdi’s IPO filing
Nahdi Medical is seeking to raise $1.3 billion in its IPO, which would place it behind Saudi Aramco’s record $29.4 billion listing in 2019. ACWA Power International’s $1.2bn IPO last year was second after Aramco.
Nahdi Medical plans to avail 39 million shares after Saudi’s Capital Market Authority gave its approval last December 29.
Observers say the company is seeking a valuation of around $4.3 billion in the IPO with the book-building process to start in March.
Some of the biggest IPOs in 2021 also included Solutions by STC (sought to raise $820 million) and Saudi Tadawul Group ($1 billion).
Saudi IPOs are getting priced at the top of offering ranges, with offered shares surging on their trading debut. The Saudi benchmark index had jumped about 9 percent in early 2022, extending its 2021 gains of 30 percent.
Nahdi Medical and telehealth
Like many health providers during the COVID pandemic, Nahdi Medical grew its telehealth business, and registered over 16,000 teleconsultation calls with general practitioners in January 2022, compared to just 1,000 in January last year.
Saudi’s Al-Dawaa chain of chemists is looking to multiply its store network and grow its e-commerce business, following an expected $500 million IPO.
The company has over 900 pharmacies across 130 cities in the Kingdom, having opened 87 new branches in 2021.
It aims to raise the footprint to 1,065 stores by 2025.
Al-Dawaa ended its institutional book-building process for 25.5 million shares, with individual subscriptions invited between Feb 27 and March 1.
The company set its IPO share price offering between SAR 65 ($17.3) SR73 ($19.71) per share, aiming to float 30 percent of its SAR850 million ($229 million) capital.
GIB Capital is acting as the bookrunner for Al-Dawaa’s IPO.