Latham & Watkins Advises on the Middle East’s Largest Ever IPO

Successful US$6 billion offering by The National Commercial Bank represents the largest ever IPO in the Kingdom of Saudi Arabia and the wider Arab world and the second largest IPO to date globally this year.

November 12, 2014

The Law Office of Salman M. Al-Sudairi in association with Latham & Watkins LLP advised The National Commercial Bank (NCB) on the US$6 billion (SAR22.5 billion) initial public offering (IPO) of 25 percent of its shares at an offer price of SAR45 per NCB share. The 500 million shares sold in the IPO were held by the Saudi Public Investment Fund (PIF), and were divided into 300 million shares allocated for subscription by Saudi individuals and 200 million shares allocated for subscription by the Public Pension Agency (PPA). The individual allocation portion of this successful IPO was 23 times oversubscribed as of the close of the subscription period on 2 November 2014, and the PPA fully subscribed to the shares allocated to it. The IPO is the largest equity offering ever in Saudi Arabia and in the Arab world, and is also the second largest IPO globally so far this year. PIF retained a 44.9 percent stake in NCB after listing on the Tadawul, which took place on 12 November 2014.

NCB is currently the largest bank in the Kingdom of Saudi Arabia both in terms of customers’ deposits, total assets and operational revenue. NCB operates its business through 329 branches, the second largest banking sector branch network in the Kingdom. NCB also operates through its material subsidiaries, NCB Capital and Turkiye Finans Katilim Bankasti (TFKB).

The IPO features a unique allocation of shares designed to provide the Saudi Arabian public with the opportunity to invest alongside the government, both through subscribing individually to the offered shares, and through allocating 200 million shares to the PPA. In addition, although subscription to the IPO is limited to Saudi nationals, it has garnered significant interest from international investors as a result of the upcoming changes to Saudi Arabian regulation that would allow registered international institutional investors to invest in Saudi-listed companies.

The Latham & Watkins team was led by partners Harj Rai and Andrew Tarbuck with support from partners Salman Al-Sudairi, Craig Nethercott, Sami Al-Louzi and Scott Ballenger. Advice was also provided by associates Muhannad AlNajjab, Fadi Otaqui, Marc Makary, Megren Al-Shaalan, Peter Norris, Stephen Chan, Ibrahim Soumrany and George Zheng. The team worked closely with GIB Capital and HSBC Saudi Arabia as Financial Advisers and Lead Managers.

Rai said: “We were honoured that both The National Commercial Bank and the Public Investment Fund of the Ministry of Finance placed their confidence in our team to deliver this significant milestone transaction. It is a testament to all those involved in the process that the timeframe from the first submission of the prospectus to the Capital Markets Authority to the start of the offering period was less than 2 months.” Tarbuck added: “The success of an equity transaction of this size highlights the attraction of IPOs in the Kingdom and also the wider GCC, and further encourages increasing liquidity in the Middle East’s equity capital markets. This banner IPO really puts the emerging markets on the global stage.”

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