Arab News, Monday, May 08, 2023 | Shawwal 18, 1444
PIF plans to acquire ‘significant’ stake in Saudi papermaker MEPCO
Saudi Arabia: Saudi Arabia’s Public
Investment Fund eyes acquiring a “significant” minority stake in Middle East
Paper Co. as the sovereign fund aims to broaden its investments in local
businesses.
In a bourse filing, MEPCO said the sovereign
wealth fund intends to subscribe to newly issued shares in the company for a
price of SR31.50 ($8.40) per share, subject to approval from the Capital Market
Authority and other regulatory bodies.
MEPCO shares were trading at SR34 per share on
Tadawul as of 12 p.m. Saudi local time on Sunday.
Both companies agreed to execute a non-binding
memorandum of understanding which will expire on July 31 or upon entering into a
legally binding subscription agreement, whichever comes first, added the Tadawul
filing.
It clarified that the implementation of the
transaction is subject to both parties entering into a subscription agreement,
adding that they will cooperate and negotiate to complete the agreement.
SNB Capital is the financial adviser for MEPCO,
whereas the PIF has hired GIB Capital to advise on the deal.
The PIF is one of the largest sovereign wealth
funds in the world driven by Saudi Arabia’s Vision 2030 initiative.
It has more than SR2 trillion worth of assets
under management and aims to double that figure by 2025 and create 1.8 million
jobs, said Yasir Al-Rumayyan, governor of the PIF, on the seventh anniversary of
the launch of Saudi Vision 2030.
The acquisition is set to broaden PIF’s scope
as it expands its portfolio by diversifying its investments into local non-oil
sectors.
Its interest in MEPCO, which offers products for
packaging in multiple sectors, comes when the papermaker recorded a 22.58
percent increase in net profits at SR270.73 million in 2022, compared to
SR220.86 million in 2021.
Moreover, the company has completed 85 percent of
its SR365.5 million Juthor paper production plant which is set to begin trial
operation in this quarter.
The new plant will produce Jumbo tissue rolls for
facial tissues, pocket tissues, napkins, toilet paper, kitchen towels, and
C-fold tissues.