Saudi Arabia’s Marafiq plans list its shares on Tadawul

Marafiq is an integrated utilities services provider with presence across the power and water value-chain. Together with its various subsidiaries, Marafiq is responsible for providing utilities services in strategic Royal Commission industrial cities in the Kingdom of Saudi Arabia and is expanding its presence across the Kingdom.

The company it would proceed with an Initial Public Offering (IPO) and list Marafiq’s shares on the Main Market of the Saudi Exchange (Tadawul). Marafiq intends to offer 73,094,500 ordinary shares, representing 29.24% of the Company’s share capital, which, after taking into account our existing minority shareholders with a total of 0.76% of Marafiq’s share capital, will correspond to a 30% free float at listing.

Through this offering, institutional and retail investors will have an opportunity to participate in the long-term growth plans of Marafiq and the next wave of the Kingdom’s industrial revolution.

Marafiq Chairman Khalid M Al-Salem said that Marafiq is a critical component of Saudi Arabia’s industrial ambitions, which are central to the Kingdom’s Vision 2030.

“With our strong foothold in two of Saudi Arabia’s most strategically important industrial cities and a growing presence throughout the Kingdom, the initial public offering of Marafiq is an opportunity for investors to not only benefit from our steady and reliable cash flows but also to be part of an exciting growth story,” he added.

In his comments, Marafiq’s President & CEO Mohammed Al-Zuabi said that the announcement marked an important milestone in the company’s journey, which began almost 20 years ago when it started providing power and water services in Jubail and Yanbu.

“We have since become an integrated utilities provider offering a full suite of services across the utilities value chain with a growing footprint across the Kingdom of Saudi Arabia. With our track record of operational excellence and the highest standards of service quality, we have built long-lasting relationships with some of the world’s largest industrial companies, and we are looking forward to helping them achieve their ambitions in the growing Kingdom of Saudi Arabia,” he said.

Strong Performance

In 2021, Marafiq generated revenue of $1.65 billion, with adjusted EBITDA of $590 million and net income of $176.99 million. The company’s adjusted EBITDA margin and net income margin were 35% and 10.7% in 2021, respectively.

Marafiq’s efficient operations have helped it maintain strong profitability margins with adjusted EBITDA of between $530 million and $590 million over the last three years.

The Company has also demonstrated the resilience of its business through the COVID pandemic – in 2020 it only saw a slight dip in revenues (26%) – on the previous year. 2021 saw a return to growth, with revenues up 1.6% to 1.73 billion.

Going forward, Marafiq expects both revenue and EBITDA to grow steadily as it continues to expand its operations in the Royal Commission industrial cities, as well as across the Kingdom.

The Company has a stable cash-flow profile that is driven by a high free cash flow conversion and a regulated environment with a set tariff system. Marafiq recorded a robust cash flow conversion rate of 75% in 2021. With this strong cash generation profile, the company expects to significantly deleverage in the coming years.

The Company’s industrial customer base – some of which have long-term agreements with the company – is reflective in its financial performance, as the degree of stability, combined with a regulated tariffs framework, reduces cash flow volatility.

Marafiq’s strong financials led to attractive return on equity for its shareholders of around 10% in FY2021.