The National Center for Privatization and PPP (NCP) and the Saudi Grains Organization (SAGO) announced today it has completed the second and final batch of the flour milling sector privatization through a full divestment of the Second Milling Company and the Fourth Milling Company to qualified strategic investors. The final binding financial bids were submitted on 19 April 2021 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 second batch of the privatization, in accordance with the privatization of the flour milling, as shown below.
Award the Second Milling Company to consortium of Abdulaziz AlAjlan Sons Co. for Commercial and Real Estate Investments, Sulaiman Abdulaziz AlRajhi International Co., NADEC, and Olam International Limited pursuant to its submitted bid amounting to SAR 2,138,000,000 which constitutes the highest financial bid submitted to this company
Award the Forth Milling Company to Consortium of Allana International, Abdullah Al Othaim Markets, and United Feed Manufacturing Company pursuant to its submitted bid amounting to SAR 859,000,000which 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 second and final 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 completion of the first batch of the privatization of flour milling sector materialized in December 2020 whereby ownership of the First Milling Company was transferred to AlRaha AlSafi Foods pursuant to its winning bid which amounted to SAR 2,027,000,000 whereas ownership of the Third Milling Company was transferred to Mada and AlGhurair Ltd. pursuant to its winning bid which amounted to SAR 750,000,545. The aggregate amount of winning bids for all four Milling Companies in the privatization of the flour milling sector reached SAR 5,774,000,545.
The flour milling sector represents one of the targeted sectors for full privatization under the Kingdom of Saudi Arabia's Vision 2030, and the as one of the initiatives under the third pillar of the privatization program. 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 Ministry of Finance, the NCP and related entities.
The Saudi Grains Organization, the regulator of the milling sector and main importer and supplier of wheat to the milling companies in the Kingdom, wishes the winning consortiums a successful endeavor in managing the companies and attaining desired outcome of the privatization
The sale of the Second Milling Company and the Fourth Milling Company to the private sector will be the catalyst for the growth of the sector with the aim to further strengthen the capabilities of the sector, enhance performance, support diversification of products while maintaining quality in a cost-effective manner. The privatization initiative will further improve the services provided to citizens, and is aimed to increase employment opportunities for the national workforce through the contribution of the private sector investment in the national economy. The privatization program will assist in realizing the goals of Saudi Vision 2030 of achieving a balanced economy and rationalizing public spending through the contribution of the private sector and integration of the public and private sectors.
It is worth noting that HSBC Saudi Arabia is acting as the sole financial advisor on the Privatization with support from NCP.
