Saudi Arabia’s largest pharmacy chain to sell 30% stake in Tadawul IPO

Saudi Arabia’s largest pharmacy chain and omni-health platform Nahdi Medical plans to sell a 30 per cent stake, or up to 39 million shares, in an initial public offering on the Tadawul stock exchange.

The IPO share price will be determined at the end of a book-building period, the company said on Sunday.

Nahdi Medical hired the local unit of HSBC and SNB Capital, the investment banking arm of Saudi National Bank, as joint financial advisers and bookrunners.

“We believe we’ve reached a stage where we can open and share what we have built by inviting more shareholders into our company, which will add value to us not only from a financial point of view or funding point of view, but more importantly in terms of best practices and exposure,” said Yasser Joharji, chief executive of Nahdi.

“Today, Nahdi is the largest pharmacy retail chain in Saudi Arabia operating more than 1,150 stores in 144 cities and towns across the kingdom and a growing number in the UAE.”

There was a sharp rise in the number of listings last year in the kingdom amid an economic rebound.

Saudi Arabian companies raised almost $9.3 billion from share offerings last year, making it one of the most active IPO markets in the Middle East and Africa, according to data compiled by Bloomberg.

Last week, Al Dawaa Medical Services, another pharmaceutical retail company in Saudi Arabia, said it is seeking to raise about $500 million from an IPO.

In December, the Saudi Tadawul Group, the owner and operator of the kingdom’s stock exchange, listed on the bourse, raising $1 billion in what was one of the biggest exchange IPOs in the region.

Riyadh utility developer Acwa Power also raised $1.2bn in its listing on the Tadawul in 2021, the largest since Aramco raised about $30bn in the world’s biggest-ever stock offering.

After the completion of the institutional tranche of Nahdi Medical’s IPO, the shares will also be offered to Saudi Arabian citizens, foreign residents in the country and GCC citizens, the company said.

Nahdi Medical, half owned by Jeddah-based investment group Sedco Holding, received regulatory approval for the listing in December.

Nahdi Medical plans to use the IPO proceeds to strengthen its core retail offering, evolve into a leading omni-health platform, develop strategic functions and further enhance supply chain capabilities, the statement said.

Its pharmacies cater to more than 100 million customers annually and other services include telemedicine, express clinics, polyclinics, home health care and testing labs.

The company holds a 31 per cent market share of total pharmacy revenue in Saudi Arabia and about 10 per cent share of the total number of pharmacies, the statement said.

In 2019, Nahdi expanded its geographical footprint with one pharmacy in Dubai. The company plans to open more outlets in the UAE.

Nahdi Medical reaped 8.6bn riyals ($2.29bn) in revenue and posted 849 million riyals profit for 2020. The company employed more than 6,153 people as of June 30, 2021.

The company appointed SNB Capital to act as lead manager for the IPO. SNB, Riyad Bank, Al Rajhi Bank, SABB and Arab National Bank have been appointed as receiving agents, it said.