The Saudi Investment Bank has announced its intention to offer its Treasury Shares (approximately 75 million shares) as per the mechanism detailed in the Circular for the Offering of the Treasury Shares. The Board has determined the Eligibility Date on 11 August 2021, and the Offering Price of SAR 13.5 per share.
How to subscribe to Treasury Shares:
- On 15 August 2021, all eligible shareholders will be notified of the deposit of rights as securities in their portfolios through an announcement on Tadawul website, Tadawulaty service, and SMS by their brokerage firms.
- Rights will appear in eligible shareholder portfolios under a new rights code.
- After receiving the rights, the eligible shareholder can subscribe online through the investment portfolio in the trading platforms and mobile applications through which buy and sell orders are entered, as well as through any means or channels provided by the broker during the period from 16 August 2021 until 26 August 2021.
- At a later time, the subscribers will be notified of the deposit of their treasury shares in their portfolios.
Summary of the Offering of the Treasury Shares
| Item | Description |
|---|---|
| The nature of the offering | Offering Treasury shares to eligible investors through a mechanism similar to the tradable rights issue mechanism, taking into account some differences related to the nature of the offering |
| Purpose of the offering | Through the implementation of the offering, the Bank aims to support its financial position. Offering proceeds will be used to strengthen the Bank's capital base and boost its liquidity. |
| Offering Price: | The offering price (per share) of treasury shares specified by the Board is SAR 13.5. |
| Treasury Shares | Shares owned by the Bank in the Bank's capital, which the Bank purchased from both J.P Morgan and Mizuho Bank totaling 74,995,210 ordinary shares, representing 9.99 percent of the Bank's capital. |
| Exercise of rights | Eligible investors have the right to exercise their rights to purchase the Treasury Shares through the investment portfolio in trading platforms and applications that provide these services to eligible investors, or through any other means provided by the broker. |
| Eligible investors | All rights holders, whether registered shareholders or new investors, who purchased tradable rights during the trading period. |
| Eligibility Ratio | For eligibility purposes, each registered shareholder will be granted one 1 right for every 9 shares owned approximately*. |
| Offering operation costs | The Bank will be responsible for all the costs related to the offering and such costs will be deducted from the total proceeds of the offering. The offering costs include the fees of the Financial Advisors, the Lead Manager, and the Legal Advisor of the Bank. In addition to fees charged by government entitles (including those of Tadawul), and printing and distribution, and any other expenses or fees related to the offering. These costs are based on estimates; and therefore, they are not final. |
| Net offering proceeds after deducting offering costs | Net offering proceeds will be calculated based on the number of treasury shares offered multiplied by the offering price determined by the board of directors, less all offering-related costs. |
Timetable
| Event | Date |
|---|---|
| Approval of the Extraordinary General Assembly on the offering of Treasury shares | 4 August 2021 |
| Announcement of the Board's decision to launch the offering, and the Bank's commencement of the offering procedures of treasury shares, and the setting of the eligibility date and offering price | 5 August 2021 |
| Eligibility Date | 11 August 2021 |
| Date of deposit of rights in eligible investors' portfolios | 15 August 2021 |
| The beginning of the subscription and trading period | 16 August 2021 |
| End of trading period | 23 August 2021 |
| End of subscription period | 26 August 2021 |
| Rump Offering Period | 1 September 2021 to 2 September 2021 |
| Notice of final allocation | 6 September 2021 |
| Notice of deposit of treasury shares in investor's portfolios | To be announced by the Securities Depository Center (Edaa) |
Overview about the tradable rights offering for the treasury shares of the Saudi Investment Bank
As of 27 September 2018, The Saudi Investment Bank (the "Bank") purchased 56,245,350 shares of the Bank shares owned by the former shareholder JP Morgan International Finance. As of 28 May 2019, the Bank purchased 18,749,860 shares of the Bank shares owned by the former shareholder Mizuho Bank Ltd. The total number of purchased shares was 74,995,210 shares, which were held by the Bank as treasury shares ("Treasury shares") to be offered to shareholders later through a mechanism similar to the tradable rights issue mechanism. The terms, conditions and mechanism for the offering of Treasury shares were determined in the circular of the offering of treasury shares issued by the Bank on 14 July 2021 ("Circular").
On 4 August 2021, the Extraordinary General Assembly approved the offering of Treasury shares through a mechanism similar to the tradable rights issue mechanism, and the Extraordinary General Assembly authorized the Bank's Board of Directors to determine the date of eligibility and the offering price of treasury shares. On 5 August 2021, the Bank announced the board's decision, and the eligibility date was set at 11 August 2021, and the offering price of Treasury shares was set at SAR 13.5.
Click here to learn more about the Circular for the Offering of the Treasury Shares of the Saudi Investment Bank
Click here to go to Alistithmar Capital Website
Frequently Asked Questions
What tradable rights are associated with treasury shares?
Tradable securities entitle the holder to exercise the right to subscribe to treasury shares. Tradable rights are an acquired right for all registered shareholders in the Bank's records by the end of Wednesday (11 August 2021). Each right entitles its holder to the right to subscribe to the treasury shares offered at the sale price.
The following table defines the most important terms relating to the tradable rights process of the Treasury shares:
| Term | Definition |
|---|---|
| Right Price | The trading price of a Right as determined by the supply and demand mechanism in the market. |
| Indicative Value of a Right | The difference between the market value of the Bank’s share during the trading period and the sale price. The Saudi Exchange Market (Tadawul) will constantly calculate and publish indicative values on its website throughout the period that precedes the trading of Rights. |
| Sale Price: | SAR 13.5 |
| Exercise of the Right | Exercising the right of subscribing to treasury shares. |
| Eligibility Ratio | Each registered shareholder is entitled, on the date of eligibility, to one (1) for each (9.0006) owned shares. |
What are the main differences between the tradable rights mechanism and the adopted mechanism which is similar to the tradable rights mechanism?
The adopted mechanism, which is associated with the sale of treasury shares, is similar to the rights issue mechanism subject to some differences where:
- There is no increase in capital.
- No new shares are issued, as treasury shares will be offered by issuing tradable rights.
- Share price will not be adjusted as there are not any new shares issued
- Underwriters will not be appointed for sale purposes
- If the right is not exercised, the investor will not be subject to loss or decrease in the value of the portfolio.
- There will not be any indemnities to the rights’ owners if they did not buy the shares
What is the adopted mechanism which is similar to the tradable rights mechanism?
The below chart shows the mechanism adopted in offering treasury shares and relevant dates:
The adopted mechanism, which is similar to the tradable rights mechanism, includes the following steps:
- The Period of Holding the Extraordinary General Assembly Meeting:
On 4 August 2021, the Extraordinary General Assembly approved the offering of Treasury shares and has authorized the Bank's Board of Directors to take all necessary measures to offer treasury shares. The Board of Directors determined the eligibility date (set to be August 11, 2021), and the offering price of treasury shares (set at SAR 13.5). Tradable rights will be deposited as securities in the registered shareholder's portfolios following the eligibility date (August 15, 2021) and the rights will appear in the portfolios of registered shareholders under a new code allocated for tradable rights. These rights will not be allowed to be traded or purchased until the beginning of the subscription and trading period.
Note:
- The value of these rights will not appear within the portfolios of restricted shareholders during the period prior to the trading of the rights; however, only the number of rights will show. As for the value, the Saudi Exchange Market (Tadawul) will constantly calculate and publish indicative values on its website throughout the period that precedes the trading of Rights.
- Rights trading period:
Six working days (trading days) starting on 16 August 2021 until 23 August 2021, during which registered shareholders and new investors can trade rights.
- Subscribing to the rights related to treasury shares will be processed in two phases:
Phase One: The subscription of rights related to the Treasury shares at this stage, which begins on 16 August 2021 and ends on 23 August 2021, is limited to shareholders registered to the rights which will be deposited in their portfolios after the date of eligibility.
Phase Two: It begins after the completion of the first phase (on 24 August 2021) and lasts for 3 working days until 26 August 2021. During this phase, all right holders are allowed to subscribe, whether they are registered shareholders or individuals who purchased these rights during the trading period.
- Rump Offering Period (if any):
- If any treasury shares remain unpurchased after the end of the first and second phases, in addition to any share fractions (if any), those shares will be offered to a number of institutional investors, who will be invited by the Lead Manager after consulting with the Bank to submit their offers to buy the remaining shares during the period from 1 September 2021 to 2 September 2021. The allocation will be made to investment institutions with the highest offer first, with shares allocated proportionally to institutions who submitted the same offer.
- The offering price of unpurchased treasury shares during this period will be limited between the offering price (as a minimum) and the market price of the Bank's shares.
- All proceeds from the offering will go to the Bank (i.e. There is no mechanism to compensate shareholders who have not exercised their right to subscribe, as their ownership percentage in the Bank will not be decreased as a result of the offering, as the case is with rights issuances)
- Allocation of shares to investors:
The allocation of shares to investors will be announced on 6 September 2021.
How many rights will the registered shareholder receive?
The number of rights registered shareholders will receive depends on the shareholder ownership percentage in the capital on the eligibility date with a eligibility ratio of one right 1 right for every 9 shares owned approximately*.
*for eligibility purposes, each registered shareholder will be granted one (1) right for every 9.00063870745878 shares owned
What is the eligibility date for tradable rights?
It is the day on which the shareholders who own shares of the Bank are entitled to rights, and that will be on 11 August 2021.
When are the trading and subscription periods?
Trading and subscription to rights will begin at the same time (16 August 2021) until the end of the trading period on 23 August 2021, while the subscription continues until 26 August 2021.
Can the rights holder sell or waive the right after the trading period is over?
No. After the end of the trading period, the right owner only has the right to exercise the right to subscribe or not to subscribe. There will be no mechanism for compensating shareholders for failing to exercise their right to purchase the Treasury Shares, given that their shareholding in the Bank has not decreased as a result of the Sale.
Can shareholders who are not registered in the Bank's records on the date of eligibility be able to subscribe to shares of tradable rights?
Unregistered shareholders can subscribe to rights in the second phase, which starts on 24 August 2021 and ends on 26 August 2021, after purchasing the tradable rights during the period from 16 August 2021 until 23 August 2021.
Is it possible to sell part of these rights in order to subscribe to treasury shares?
Yes, the investor can sell part of these rights, use the proceeds from the offering of those rights to provide liquidity, and use the remaining rights to subscribe to treasury shares.
What is the subscription process?
Subscription applications are submitted through trading platforms and mobile applications or through any channels provided by these entities to their customers.
If I bought additional rights, am I entitled to trade them again?
Yes, you are entitled to sell them and buy other rights during the trading period.
Can registered shareholders subscribe to additional shares?
Registered shareholders can subscribe to additional treasury shares by purchasing additional rights during the trading period from 16 August 2021 until 23 August 2021.
What is the date of updating the eligibility record for tradable rights?
Two business days following the Eligibility Date (11 August 2021), such date being 15 August 2021.
How does the Bank intend to use the subscription proceeds?
The Bank intends to use the proceeds from the offering of Treasury shares to strengthen the capital base, boost the liquidity of the Bank's equity.
What happens to shareholders who have tradable rights but they have not exercised any of their rights during the subscription period?
In the event that the entire treasury shares are not purchased during the subscription period, the remaining Treasury shares will be offered during the Rump Offering Period. The Lead Manager will arrange such offering. No compensation will be paid to the rights owner if he/she has not subscribed to purchase the shares.
How will the investor be notified of tradable rights?
The investor will be notified through “Tadawulaty” service, a service provided by the Securities Depository Center, and via SMS sent by brokerage firms.
If the investor has more than one portfolio with more than one brokerage firm, how will the rights be calculated for the investor?
The investor's share will be distributed to the portfolios owned by the investor, based on the percentage of ownership in each portfolio. In the event of fractions, these fractions will be combined to form entire share or shares to be added later to the portfolio in which the investor owns the largest amount of rights.
Will these rights be added to the investors' portfolios under the same name/share code or will they be included under another name/code?
The acquired right will be added to the investor portfolios under the original share name with the new descriptive word "Offering of Treasury Shares", and a new code for these rights.
Can I subscribe during the weekend?
No. Subscription can be made during the official working days specified from 16 August 2021 to 26 August 2021.
