The Saudi Grains Organization (SAGO) and the National Center for Privatization and PPP (NCP) have announced the completion of the first batch of the flour milling sector privatization.
According to the announcement, SAGO (Profile) and NCP completed a full divestment of the First Milling Company and the Third Milling Company to qualified strategic investors. The final binding financial bids were submitted on 5 July 2020 upon completion of due diligence during the bidding phase.
The award of each milling company was decided based on the highest financial bids submitted by qualified strategic investors, which were thoroughly reviewed to ensure adherence to the terms stipulated in the Request for Proposal for the first batch of the privatization, in accordance with the privatization of the flour milling, as shown below:
Award the First Milling Company to Raha AlSafi Consortium pursuant to its submitted bid amounting of more than SAR 2 billion, which constitutes the highest financial bid submitted to this company.
Award the Third Milling Company to AlRajhi – Ghurair – Masafi Consortium pursuant to its submitted bid amounting to SAR 750 million, which constitutes the highest financial bid submitted to this company.
The completion of the sale and transfer of ownership to winning bidders is subject to a number of customary legal requirements and condition precedents, which must be met before the transaction is closed.
The successful award of sale of the milling companies in the first batch of the privatization reflects the attractiveness of Saudi Arabia’s flour sector to investors, considered one of the biggest markets for flour in Middle East and North Africa, characterized by high and attractive growth rates and potential to enhance sector productivity and further increase products quality.
It is worth noting that the qualification phase for the second and final stage of the privatization of flour milling sector will launch shortly, which includes the sale of the Second Milling Company and Fourth Milling Company.
The flour milling sector represents one of the targeted sectors for full privatization under the Kingdom of Saudi Arabia’s Vision 2030, and as one of the initiatives under the third pillar of the privatization program document. The privatization of the flour milling sector enjoys the support of specialized regulatory and executive authorities led by the Ministry of Environment, Water and Agriculture, the NCP and related entities.
It is worth noting that HSBC Saudi Arabia is acting as the sole financial advisor on the Privatization.