INTERVIEW: Amlak IPO a vote of confidence in long-term fundamentals, says CEO Abdullah Al-Sudairy

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Updated 28 June 2020

INTERVIEW: Amlak IPO a vote of confidence in long-term fundamentals, says CEO Abdullah Al-Sudairy

  • Property finance CEO explains how stock exchange listing will benefit the mortgage market

Amlak International, the Saudi Arabian real estate finance company, surprised markets with the announcement that it was pressing ahead with an initial public offering (IPO) on the Tadawul that could value it at around SR1.5 billion ($400 million).

For one thing, the Kingdom’s economy, similar to the rest of the world, has been rocked by the ravages of the coronavirus disease (COVID-19) pandemic; for another, global financial markets are in a state of uncertainty as the world economy teeters on the brink of the worst recession since the 1930s.

Abdullah Al-Sudairy, Amlak’s CEO, is determined to overcome those challenges with the Kingdom’s first IPO since the virus outbreak.

“We believe the long-term fundamentals have not changed. Yes, there has been a temporary disruption, not just in Saudi Arabia but globally, but we believe this will pass,” he told Arab News.

Amlak was widely rumored to be considering the market initiative earlier this year before the pandemic broke on the world. That put the plans on hold for a while, but the decision to go ahead with it now represents a vote of confidence in the business, in the fundamentals of the Saudi economy, and in the Kingdom’s financial markets.

It can also be viewed as a belief that the recovery from the pandemic will come quickly, and will be in the V-shape talked about by some economists — a sharp upturn to follow the opening up of economies around the world as lockdowns are lifted and some return to normality takes place — even if it is the “new normal” many experts predict.


Born: Jouf, Saudi Arabia


  • Bachelor’s degree in accounting, King Saud University
  • Thunderbird School of Global Management, Arizona, US


  • Assistant general manager, Samba Financial Group
  • Director, Saudi Ceramics
  • Board member, Dallah Healthcare
  • CEO, Amlak International

“Saudi has a young population, the government is determined to improve jobs and increase housing ownership in the Kingdom as part of the Vision 2030 (reform plan), and we believe this is going to happen.

“Our business has not been severely disrupted these past few months. There has been a limited disruption because of the curfew but origination numbers have been acceptable, even in the first half,” Al-Sudairy added.

Despite this positive outlook, the decision to press ahead with the IPO — which is being organized by the investment banking arm of the Kingdom’s premier financial institution NCB Capital — must have been weighed carefully.

The International Monetary Fund said recently that the Saudi economy would shrink by 6.9 percent this year, and the government has brought in a series of measures to deal with the downturn and the hole in public finances caused by the fall in oil prices.

Some analysts have talked about a return to the “austerity” regime that the Kingdom used to deal with the last downturn in oil prices that lasted for two years from 2014.

Value added tax has been hiked to 15 percent, government-funded cost of living allowances have been scrapped, and some big projects — designed to diversify the economy away from oil dependency — have been slowed.

None of that would seem to be an economic environment designed to encourage home ownership, as the government has pledged. But Al-Sudairy is adamant that the long-term outlook is good and believes the measures taken by the government will not have a significant effect on Amlak’s business.

“Quite frankly, I am not an economist, but I can see in our retail business most of the houses we finance are for first-time buyers, and most are below SR850,000. The government has been lifting all VAT on such properties. If you are a first-time buyer below that level, the government will shoulder the VAT on your behalf,” he said.

Amlak does not just fund residential property, but is also big in the commercial space, building the office complexes, retail developments and other business projects. Again, some experts believe that the COVID-19 pandemic will have an irreversible effect on this sector, as people get used to working from home and doing much of their business in the digital, rather than physical, space.

The VAT increase did not apply to much of Amlak’s commercial projects, Al-Sudairy pointed out, but he agreed there would be some permanent changes to the commercial sector as a result of changing post-pandemic work patterns.

“The demand on commercial property will shift. We saw what happened in the US and Europe in retail commercial property, and they have an issue. But let us see what happens with logistical property.

“People are buying online so you don’t need retail shops as much as before, but you will need the warehouses to ship the goods. We will see shifts in demand, but the demand is still there in a different way. Maybe demand for offices will not be strong, but hospitals are strong, schools are strong, and logistic property will continue to be strong as demand goes online,” he added.

He takes a relaxed attitude to the volatility of financial markets. The Tadawul index, which fell along with all global markets when the pandemic first hit, has been quite resilient since then. But many financial experts are predicting a “bear run” in global equities later this year.

“What I focus on is the fundamentals of our business. We know the stock markets are a leading indicator of things that are going to happen. They sum up future expectations. So, I would rather focus on  what is the fundamentals of our business, the long-term strength  of our business.

“I don’t worry much about where the stock markets will go, but it is good that we are approaching an all-time high in some areas. I believe the markets reached a high point three weeks ago, but the focus is long-term fundamentals for us,” Al-Sudairy said. The twin aims of the IPO, he added, was to give Amlak more visibility and access to better ways of raising finance.

“We are in the mortgage business, and we deal with a large part of society, and we believe an IPO will give us more visibility. This is important for us.

“All publicly listed companies would normally have favorable treatment toward the cost of their capital by a reduction in the cost of their debt. You can see from our income statement that the biggest cost item we have is cost of debt,” he said.

The successful IPO of Saudi Aramco last year — the biggest stock market flotation the world has ever seen — has encouraged investors in the Kingdom to look more favorably on equity markets, and introduced a whole new group of retail investors to the culture of share ownership.

Amlak shares are being offered initially to institutional investors via a book-building process, but there is a mechanism in the IPO by which, if demand is good, retail investors will be offered up to 10 percent of the shares. There could be benefits from having the interests of Amlak investors and mortgage holders align via share ownership.

“It’s always healthy to have investors that challenge the board and challenge the management. We hope that with more diversified investors we will be challenged more, because challenge is good, it brings up ideas and more motivation. But I do know that when you have a greater proportion of sophisticated investors owning part of the company the challenge tends to be more elevated and healthier,” Al-Sudairy said.

But he does not expect a significant shift in the company’s behavior when it gets public company status. It is already run according to the strict regulations of the Saudi authorities, and those will be maintained, even strengthened.

“We don’t believe there will be much change in that respect, because as you know the central bank is very precise and strict in how they govern the industry,” he added.

His focus, even as a public listed company, will continue to be on the long-term health of Amlak.

“We will always focus on the long-term competitive advantage and the core competency of the company. We are a long-term player rather than a short-term tactical player.

“We have to ensure Amlak in the long term is extremely competitive and has a sustainable competitive advantage,” he said.

Lebanon’s $15bn blast repair bill adds to economic misery

Updated 06 August 2020

Lebanon’s $15bn blast repair bill adds to economic misery

  • Beirut port devastation brings warnings of housing crisis and billion-dollar hit to exports, imports

BEIRUT: Lebanon could face a repair bill of up to $15 billion in the aftermath of a cataclysmic chemical blast at Beirut port, according to a top government adviser.

The explosion, which was felt as far away as Cyprus, killed at least 100 people, wounded thousands and left an additional 300,000 Beirut residents homeless. 

It is thought to have been caused by nearly three tons of ammonium nitrate, a common agricultural fertilizer, that was confiscated in 2013 and improperly stored in warehouses. But after months of economic misery, the collapse of the currency and mounting civil unrest, it is being seen as the consequence of years of neglect, financial mismanagement and corruption as across the country.

Charbel Cordahi, an economist and financial adviser to the president, estimated the cost of damages from the explosion, including compensation, at around $15 billion. 

“Up to 70 percent of Lebanon’s trade channels through the port of Beirut,” he told Arab News.

“Airports and other ports in the country can facilitate only 30-40 percent of this trade, and opening the borders with Syria can facilitate another 20 percent. This means that at least $5 billion of imports will not find their way to the country, and another $2 billion of exports will stay on ground in the coming eight months. This represents a loss of around $4 billion, or 15 percent of gross domestic product,” he said.

He added that without an international aid program, “Lebanon cannot face this disaster.”

The explosion caps months of misery for the Lebanese, nearly half of whom now live below the poverty line. Popular anger directed at the government and political classes has swelled as a wider economic crisis has been made worse by the impact of the coronavirus pandemic.

Efforts to assess the damage at Beirut port, the country’s main trade gateway, are already underway. The second priority will be to restore food security and ensure the country does not run out of wheat after grain silos were destroyed, while also making sure residents who have lost their homes are rehoused as quickly as possible. Maintaining medical supplies and mitigating the environmental impact will also be a priority for city chiefs.

Many residents of the city are unable to return to their homes, even if their buildings remain visibly intact, because of the potential structural damage caused by the 4.5 Richter-scale blast.

“We need other countries to help us reconstruct Beirut,” Gen. Mohammed Kheir, secretary general of the Higher Relief Council, told Arab News. “We would be grateful if each country rebuilt a street or neighborhood in Beirut, like they did following the 2006 Israeli aggression. That would be the best way.”

He also appealed for emergency prefab homes for families for whom the government may not be able to provide housing.

Beirut Gov. Marwan Abboud, who estimated the primary damage at $3-$5 billion, appealed to the international community and the Lebanese diaspora to help.

Health officials had told Arab News that the country was running low on medical equipment, especially items needed for major surgery, and hoped that aid from abroad would fill the gap.

It is still too early to assess the full environmental impact of the blast, but environmental expert Mostapha Raad said a potentially bigger catastrophe may have been averted when the wind carried away a toxic cloud filled with nitric acid away from land and toward open sea.

“We were afraid the ammonium nitrate residue would lead to cooling off the weather and causing acidic rain, but according to tests on air samples, the result was green and the cloud disappeared over the sea,” he said.