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Agriculture major Nadec lines up $533m rights issue

Nadec store Nadec
Nadec's products are sold in 35,000 stores throughout the GCC
  • Saudi company seeks to raise SAR2bn via a rights issue
  • Nadec’s net profit for Q1 doubled year on year
  • Collaboration with Pure Harvest aims to improve food security

Saudi food processing company National Agricultural Development Company – known as Nadec – has filed an application to regulators to increase its capital by SAR2 billion ($533 million) through a rights issue.

Nadec’s application has been sent to the Capital Market Authority for approval, the company said in a statement to the Saudi Stock Exchange. It has appointed Riyad Capital as financial advisor to manage the subscription process.

The capital hike will help to fund the company’s 2023-2027 strategy, which aims to grow business operations, develop new markets and expand product range.

Under the plan unveiled earlier this year, Nadec is targeting annual revenues of at least SAR6 billion by 2027. 

The company produces over 1.4 million litres of dairy and juice a day and has products sold in 35,000 stores across the GCC. Last month it posted net profit of SAR38 million for the first quarter of this year, more than double the figure achieved in the year-earlier period.

Revenue for the quarter also increased by 22 percent to SAR749.4 million, driven mainly by a rise in sales of the dairy and food processing sector.

Nadec plans to expand production and distribution operations, as well as increase its fruit and vegetables range by linking up with more farmers around the kingdom.

Earlier this year it signed an agreement with Pure Harvest Smart Farms Company to deliver a large-scale national food security project, which aims to deliver over 27 hectares of production in the short term – with prospects for significant future expansion.

Pure Harvest will design, construct and operate high-tech, climate-controlled hybrid food production systems that allow year round production and Nadec will deliver its partner’s fresh produce to the market.  

Under its 2027 strategy, the company, which holds 92,000 cows, plans to enter the red meat business while a joint venture agreement with Saudi Leha Group will produce and market potato seeds in the kingdom.