Saudi Arabia expected to launch grain privatisation process in Q2

Saudi Arabia is expected to announce the sales process for privatising part of its flour milling sector in the second quarter of the year, according to a statement from HSBC bank, which is advising on the sale.

The announcement is expected to include the timetable for qualifying investors and the launch of the sales process for selling a stake in four flour milling companies owned by the state-owned Saudi Grains Organization (SAGO).

“It is of note that the milling companies represent a unique investment opportunity in the flour milling sector in Saudi Arabia, the largest economy in the Middle East,” a note from HSBC said.

The sale is expected to be one of the first in a slew of privatisations as Crown Prince Mohammed bin Salman attempts to allow private investors into the country and diversify it away from oil exports.

The grain sector is one of 16 that is expected to be privatised alongside the oil, healthcare and water sectors, as the Kingdom seeks to raise $200 billion to deal with its budget deficit.

SAGO, which is responsible for importing all of the country’s 3.5-million mt per year wheat imports, last year arranged the nation’s 13 milling operations into four separate companies with a view to selling a minority stake in each.

News wire Reuters has reported that Bunge and Archer Daniels Midland had expressed an interest in the sector.

Corrected Jan.18 to reflect the fact that Saudi Arabia imports 3.5 million mt of wheat. It incorrectly stated it imported 3.5 million mt of grain.