Alsorayai plans to raise $65m

Saudi-based floor covering manufacturer Alsorayai Trading and Industrial Group will raise SR243 million (Dh238m, $65m) from an initial public offering that starts tomorrow, the IPO's financial advisor said.

"We priced the shares at SR27 each," a spokeswoman at Aldukheil Financial Group said.

Alsorayai is offering 30 per cent of its capital, or nine million shares, over the February 1-7 period. This would be the second IPO in the Saudi market this year after fast-food chain Herfy Food Services Company. Alsorayai was set up in 1953 by Alsorayai brothers from Makkah to import handmade carpets from India, Iran and Pakistan before they started importing manufactured carpets and rugs from European countries.

It opened its first carpet and rugs factory in 1986 and currently has a production capacity of 86 million square metres per annum. About 75 per cent of the firm's revenue comes from the Saudi market and the remainder from 65 countries, according to the company's website.

The firm, which currently employs 2,400 people, leads some 17 competitors domestically with a market share that reached 36.7 per cent in 2007.

Its listing prospectus, which does not include the IPO's price yet, showed that total carpet and rug sales in Saudi Arabia rose eight per cent in 2008 to SR1.35 billion after falling 23 per cent in 2007.

Internationally, Alsorayai competes with firms such as Interface. Alsorayai estimates its own global market share in floor covering products at 0.49 per cent.

Proceeds of the sale will go to Alsorayai's shareholders, the prospectus said, adding: "The firm [Alsorayai] will not get any part of the IPO's proceeds."

Its net profit in 2008 fell to SR73.9m from SR84.4m a year earlier, while turnover increased to SR937m from SR840.9m in 2007, according to its listing prospectus.

During the first half of 2009, Alsorayai made a net profit of SR36.1m on sales of SR437.7m.

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