Gulf KFC operator seeks up to $1.8 billion from Saudi, UAE IPO

A customer lifts an order of food from a delivery hatch, opened by facial recognition technology, inside a new contactless Kentucky Fried Chicken (KFC) restaurant, operated by Yum! Brands Inc., ahead of its official opening in Moscow, Russia, on Friday, June 12, 2020. Before the pandemic, robot-prepared food companies were a hit with investors, but ambitious sales goals didn’t materialize. Photographer: Andrey Rudakov/Bloomberg

Saudi Arabia’s wealth fund and Dubai businessman Mohamed Alabbar are seeking to raise as much as $1.8 billion from the dual-listing of the Middle Eastern operator of KFC and Pizza Hut restaurants.

The Public Investment Fund and Alabbar are selling 2.53 billion shares in Riyadh and Abu Dhabi in Americana Restaurants International Plc at 2.55 riyals ($0.68) to 2.68 riyals each, according to a statement on Monday. It’s set to be the biggest Saudi IPO this year and will value Americana at as much as $6 billion.

The company will be the first to have shares traded in both the United Arab Emirates and Saudi Arabia, where the Tadawul stock exchange has for years been encouraging firms to dual list. The deal is being closely watched as it will set a precedent for other regional businesses to list their shares on the two exchanges.

Americana is part of a late-year rush of IPOs in the Middle East that has emerged as a bright spot in an otherwise grim market for listings globally, with proceeds down significantly from last year because of high inflation and hawkish central banks. The region accounts for almost half of the IPO volumes in Europe, the Middle East and Africa this year.

Diversification via IPOs

A surge in oil prices through 2021 and the early months of this year, coupled with a rotation by investors into the region following Russia’s invasion of Ukraine, have helped underpin IPOs. Saudi Arabia and the UAE are also seeking to sell stakes in state assets to fund the diversification of their oil-dependent economies.

The offer period for Americana will run from Nov. 14 to Nov. 21 for retail investors in the UAE and Saudi Arabia, and until Nov. 22 for institutional investors. The final offer price is expected to be announced on Nov. 23 and trading on both exchanges will start Dec. 6.

Americana operates restaurants for brands including Baskin Robbins, Costa Coffee and TGI Fridays as well as KFC and Pizza Hut, according to its website. It was previously operated by Kuwait Food Co. under the wider Americana umbrella, which included both the restaurant and food businesses. The IPO is for the restaurant business only.

Alabbar’s Adeptio AD Investments bought the firm in 2016. The Saudi wealth fund took a 50% stake in Adeptio at the end of that year and Americana subsequently delisted from the Kuwait stock exchange.

First Abu Dhabi Bank PJSC, Goldman Sachs Group Inc., Morgan Stanley and SNB Capital are joint global coordinators for the IPO, while HSBC Holdings Plc and EFG Hermes are joint bookrunners.