Dar Al Arkan covers 81% of IPO

Riyadh: Investors had offered Dar Al Arkan 81 per cent of the 3.33 billion riyals ($888 million) the Saudi property developer is looking to raise in an initial public offering, the arranger said, citing Tuesday's figures.

The company, which caters mainly to a middle-class market, is selling 59.45 million shares - equivalent to 11.01 per cent of its stock - at 56 riyals each, according to a prospectus for the one-week sale that ended yesterday. The IPO values the company at $8.06 billion.

"By Tuesday, Dar Al Arkan had managed to cover 81 per cent of its IPO", Mohammad Al Hajiri of Samba Financial said.

"We will know the final figures and performance by tomorrow," he said. The offer began on December 1.

Seventy per cent of the shares have been reserved for institutions and 30 per cent for individual investors, he said,

Demand for housing in Saudi Arabia, the largest Arab economy is surging as the population expands.

The kingdom will need at least 1.8 million housing units by 2013, speakers said at a real estate conference in September.

About 60 per cent of Saudi Arabia's 16 million nationals are below the age of 29 and fewer than half of Saudis own a home.

The share price of 56 riyals makes it the biggest real estate firm by market value on the Saudi market, the largest Arab bourse.

Dar Al Arkan forecast last year it would develop projects worth about 36 billion riyals through 2009. Its project were worth 9.53 billion riyals at end-June 2007, the prospectus said.

Annual housing demand is expected to reach 201,000 units by 2010, an increase of 26.4 per cent since 2004, Dar Al Arkan said this month. But the company faces rising land and building material costs.