{"id":89066,"date":"2024-08-27T00:00:00","date_gmt":"2024-08-27T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/ksa\/2024\/08\/27\/savola-lines-up-board-approval-for-capital-hike\/"},"modified":"2024-08-27T00:00:00","modified_gmt":"2024-08-27T00:00:00","slug":"savola-lines-up-board-approval-for-capital-hike","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/ksa\/2024\/08\/27\/savola-lines-up-board-approval-for-capital-hike\/","title":{"rendered":"Savola lines up board approval for capital hike"},"content":{"rendered":"

Savola Group\u2019s board of directors signed off on the company\u2019s SAR 6 bn rights offering<\/strong> to boost its capital<\/strong>, adding 600 mn shares valued at SAR 10 apiece, it said in a disclosure to Tadawul<\/a>. The Tadawul-listed player will then reduce its capital before offloading its entire 34.5% stake in Almarai<\/a> to its existing shareholders, with each of the following steps pending regulatory and shareholder approvals.<\/p>\n

This has been in the works: <\/strong>Savola first unveiled its plans to exit one of its \u201cmost successful investments for Savola Group to date\u201d in February<\/a>, followed by issuing a prospectus (pdf)<\/a> for the rights offering earlier this month. Its investment in the dairy giant increased more than 100x since it took a majority stake in what ultimately became the region\u2019s largest dairy outfit in 1991. The PIF is the second biggest shareholder with a 16% stake<\/a> it holds through one of its units. <\/p>\n

REFRESHER-<\/strong> Savola wants to \u201c unlock value<\/a> \u201d \u2014 it doesn\u2019t think the market fairly values what it does or what Almarai does, writing in an FAQ<\/a> that \u201cover the past years, Savola\u2019s market capitalization is approximately equal to the market value of its stake in Almarai.\u201d For folks who like Almarai\u2019s story, it\u2019s a way to get direct exposure. And if you like Savola, buying Savola stock gives you direct exposure to its future growth prospects and starts to do away with the so-called \u201cholding company discount.\u201d<\/p>\n

What are those growth prospects?<\/strong> Savola is being cautious, but says it will use the proceeds from the rights issue to pay down debt and \u201cinvest in the growth of its portfolio companies.\u201d Savola says that it doesn\u2019t need the transaction to go through to meet its debt obligations. Look for it to deleverage before taking on fresh cash at optimized terms to fund its growth going forward.<\/p>\n","protected":false},"excerpt":{"rendered":"

This is a step towards offloading its Almarai stake<\/p>\n","protected":false},"author":1,"featured_media":89067,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2704],"tags":[284,2419,10,706],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-89066","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-capital-markets","tag-almarai","tag-capital-markets","tag-enterpriseam-ksa","tag-savola-group","wpautop","entry"],"acf":{"mongo_id":"78765763-c900-47fb-9b48-d55fd42e216d","order":"4","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2024\/2\/699.jpg","photo_position":"above","homepage_title":"","full_issue_title":"Savola lines up board approval for capital hike","related_issue":[89059],"teaser":"This is a step towards offloading its Almarai stake","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2024\/8\/.ca4df77b-e0f7-4731-8d5f-1833a783062f.mp3"},"yoast_head":"\nSavola lines up board approval for capital hike - 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