Alsorayai hopes to raise 243m riyals from IPO

Riyadh:  Saudi-based floor covering manufacturer Alsorayai Trading and Industrial Group will raise 243 million riyals (Dh238 million) from an initial public offering that starts tomorrow, the IPO's financial adviser said.

"We priced the shares at 27 riyals each," a spokeswoman at Aldukheil Financial Group said yesterday.

Alsorayai is offering 30 per cent of its capital, or 9 million shares, over the February 1-7 period. This would be the second IPO in the Saudi market this year after fast-food chain Herfy Food Services Company.

Alsorayai was set up in 1953 by Alsorayai brothers from Makkah to import handmade carpets from India, Iran and Pakistan before they started importing manufactured carpets and rugs from Europe.

It opened its first carpet and rugs factory in 1986 and currently has a production capacity of 86 million square metres per annum. About 75 per cent of the firm's revenue comes from the Saudi market and the remainder from 65 countries, according to the company's website.

The firm, which currently employs 2,400 people, leads some 17 competitors domestically with a market share that reached 36.7 per cent in 2007.

Its listing prospectus which does not include the IPO's price yet showed that total carpet and rug sales in Saudi Arabia rose 8 per cent in 2008 to 1.35 billion riyals after falling 23 per cent in 2007.

Internationally, Alsorayai competes with firms such as Interface. Alsorayai estimates its own global market share in floor covering products at 0.49 per cent.

Proceeds of the sale will go to Alsorayai's shareholders, the prospectus said, adding: "The firm [Alsorayai] will not get any part of the IPO's proceeds."

Its net profit in 2008 fell to 73.9 million riyals from 84.4 million riyals a year earlier, while turnover increased to 937 million riyals from 840.9 million riyals in 2007, according to its listing prospectus.