IPO Roadmap for Real

Estate Developers
Unlocking Potential: IPO Simplified!
 Session Outline
Session 1:
Trainer Introduction
Going Public: IPO Unveiled
Understanding the IPO Requirements

Refreshment Break

Session 2:
IPO Challenges to Consider
IPO Route Chart
Activity: IPO Negotiation Simulation

Training – IPO Roadmap for Real Estate Companies

Going Public: IPO Unveiled
 An IPO is an initial public
Embark on your
offering, in which shares of a
private (family-owned)
Investment Journey:
company are made available
to the public for the first
Exploring IPOs
time. An IPO allows a real-
estate company to raise
equity capital from public
investors.

Training – IPO Roadmap for Real Estate Companies

Skyrocket your
growth: Greater Access to Capital
Raise significant funds to fuel growth, expansion, and
new projects

The power of going Increased Liquidity

public with an IPO Provide shareholders with an opportunity to trade
shares and unlock investment value.

IPOs are the way for unlisted or privately

traded real-estate companies to raise funds Better Public Image & Market Visibility
from the open market. Public listing signifies financial stability and fosters
market confidence.

Increased Trust of Stakeholders

Attract new investors and partners with a
broader market reach.

Training – IPO Roadmap for Real Estate Companies

 Listing Avenues in KSA market

Tadawul - Main Nomu Parallel

Tadawul, the primary stock exchange in Saudi NOMU, the Parallel Market launched in 2017, provides a
Arabia, was established in 2007 and has since tailored platform for SMEs seeking equity financing
become the largest exchange in the Middle opportunities. NOMU's simplified listing requirements and
East by market capitalization. flexible regulatory framework cater to smaller companies,
enabling them to access capital markets and fuel their
growth trajectories.

Training – IPO Roadmap for Real Estate Companies

KSA Equity Market Landscape

Total Equity Capitalization – SAR 10,988 Billion

Tadawul – Main Nomu - Parallel

Market Cap: SAR 10,938 Billion Market Cap: SAR 50 Billion

No. of Listed Companies: 234 No. of Listed Companies: 86

No. of Listed Real-Estate Developers: 12 No. of Listed Real-Estate Developers: 4
No. of Real-Estate Investment Trusts: 17 No. of Real-Estate Investment Trusts: 1

Major Companies Major Companies

▪ Dar Al Arkan ▪ View United Real Estate Development Co.

▪ Red Sea International ▪ Al Waha REIT
▪ Jabal Omar Development Co.
▪ Saudi Real Estate Co.
▪ Jadwa Saudi REIT Fund
 Tadawul - Main Nomu - Parallel
Listing Requirements Stringent criteria including minimum market Relaxed requirements with no minimum
capitalization and profitability thresholds capital or profitability criteria

Company Size and Scope Hosts large-cap and established companies Primarily focuses on SMEs

Governed by comprehensive regulations established by

Regulatory Framework Adheres to regulatory standards tailored for SMEs
the Saudi Arabian Capital Market Authority (CMA)

Boasts a large and diverse investor base, contributing to Developing investor base with a focus on
Investor Base and Liquidity
high liquidity levels supporting emerging companies

Market Perception and Recognized as the primary stock exchange in Saudi Gaining prominence as an alternative market
Visibility Arabia supporting the growth of SMEs

Attracts international investors through initiatives like the Working towards enhancing international access
International Access Qualified Foreign Investor (QFI) program and inclusion in and participation through strategic initiatives and
global indices such as the MSCI Emerging Markets Index partnerships

Diverse array of listed companies spanning sectors like

Focuses on SMEs but aims to diversify across
Sector Representation banking, petrochemicals, telecommunications, real estate,
sectors over time
and healthcare
 Is going public right for your company?

Attractive track record Strong Sales & Earnings Appealing products or

Companies with
growth services
above-average Successful public Established
industry growth companies demonstrate companies rely on
A real estate company attract more potential market support for their past sales, while early-
investors than those product or service, stage ones use market
usually begins to think
with limited or erratic ensuring robust annual research and product
about going public when growth. growth. superiority to address
the funding required to this question.
meet the demands of its
business begins to exceed
the company’s ability to Are the market Is the leadership Do the benefits
raise additional capital conditions, right? committed and capable? outweigh the cost?
through other channels on IPO demand is affected It is essential to have a skilled Shareholders sell equity
attractive terms. by market strength, board and management for for immediate proceeds,
public perception, strong corporate governance trading control and future
But simply needing capital industry conditions, tech and effective board returns and public equity
does not always mean that changes, and more. committees. raising carries significant
going public is the right initial costs.
answer. There are a Timing matters as Successful IPO leadership
number of questions that a predicting market demands commitment to Balancing benefits and
company should ask itself sentiment is tricky. meeting requirements, costs of IPO might
before deciding to go engaging with investors, and require years to assess
public timely reporting. accurately.

Training – IPO Roadmap for Real Estate Companies

02 Understanding
the IPO
Requirements
Understanding the IPO
Requirements
Going public is not an easy feat, but it can be
rewarding if you overcome the common IPO
execution challenges.

Many Real Estate companies start preparing for

becoming a publicly listed company well before
the actual IPO process starts.

In fact, advance preparation is a critical success

factor in achieving a smooth execution process.
Steps can be taken early to properly manage the
potential challenges a Real-Estate Company may
face during the initiation phase of the IPO journey.

Training – IPO Roadmap for Real Estate Companies

Understanding the IPO
Requirements
Health Check of Financial Structures
Adoption of latest International Financial Reporting Standards (IFRS)
along with policies and procedures for finanace and accounting
Good Financial
1.
operations

Performance
Robust Financial Standing
Demonstrated track Strong financial performance with a demonstrated track record of
record of profitability, profitability, revenue growth, and healthy financial ratios attract stronger
investor interest. A history of strong financial performance, including
revenue growth, and consistent revenue growth, profitability, and healthy margins, instills
healthy financial ratios. confidence in potential investors.

Resilient Growth Trajectory

A company with a strong financial position, characterized by robust
revenue growth and profitability, is typically valued more favorably
by investors, leading to a higher IPO price and market capitalization.

Training – IPO Roadmap for Real Estate Companies

Understanding the IPO
Requirements
Strong Governance Structures
Well established Board of Directors with varied representation of
executive, non-executive and idependent directors. Regulatory
Strong Regulatory
2.
bodies such as the Capital Markets Authority (CMA) require strict
compliance with the defined governance requirement.
Compliance &
Governance Established Risk & Compliance Procedures
Existence of well-established compliance, risk management and internal
audit functions to ensure a strong internal control environment and
Strong corporate compliance with regulatory requirements.
governance structure
with established
compliance procedures. Key Board Committees
The establishment of an independent board of directors, along with
committees for audit, risk management, and HR & remuneration,
exemplifies adherence to best practices. The presence of key
committees and a robust governance structure bolsters investor
confidence.

Training – IPO Roadmap for Real Estate Companies

Understanding the IPO
Requirements
Sustainable & Scalabale Business
Efficient operations make it easier for a company to scale its
business. Demonstrating the ability to scale operations efficiently is
Operational
3.
important for investors who are looking for growth potential.

Efficiency
Efficient & Effective Operations
Efficient operations help in minimizing wastage of resources, whether it's
time, money, or materials. This directly translates to cost savings, which
Backbone of a successful can enhance profitability.
and sustainable business,
enabling it to thrive in a
dynamic and competitive
environment.
Streamlined Processes
Streamlining processes and workflows leads to better productivity.
When tasks are completed more efficiently, employees can accomplish
more in less time, increasing overall output.

Training – IPO Roadmap for Real Estate Companies

Understanding the IPO
Requirements
Proven Track Record
Experienced and qualified leadership team with a proven track
record is an extremely critical requirement for working towards a
Management
4.
successful IPO.

Expertise
Relation Building with External Stakeholders
Experienced management team plays a critical role in building
relationships with potential investors and effectively communicating the
Experienced and qualified company's value proposition. This involves articulating the company's
leadership team with a business model, growth prospects, competitive advantages, and
addressing investor concerns to garner support for the IPO.
proven track record.

Strategic Decision Making

Experienced management can make strategic decisions regarding the
timing and pricing of the IPO. They need to assess market conditions,
competitor activity, and investor sentiment to determine the optimal
timing for going public and setting the IPO price.

Training – IPO Roadmap for Real Estate Companies

Understanding the IPO
Requirements
Building Investor Confidence
Having an attractive Corporate Story is vital to attract investor
interest. Engaging with investment banks, analysts, and media plays
Market Positioning
5.
a pivotal role in building a robust investor relations program.

& Investor Relations

Communication of the Plan
Communication of an engaging project plan is crucial to maintain
positive investor interest. Investor relations activities can positively
Crafting a compelling influence the company's valuation by ensuring that investors fully
equity story that highlights understand the company's business model, competitive advantages,
the firm's unique value growth strategies, and industry dynamics.
proposition, growth
trajectory, and market
position attracts potential Attracting Long Term Investors
investors.
Building relationships with institutional investors and analysts through
investor relations efforts can attract long-term investors who are
committed to supporting the company's growth over time.

Training – IPO Roadmap for Real Estate Companies

Understanding the IPO
Requirements
Access to Capital
Different offering methods have varying levels of complexity and
potential to raise capital. A traditional IPO involves issuing new
Public Offering
6.
shares to the public, while a SPAC involves merging with a publicly
traded shell company.
Strategy
Timing and Speed:
The time it takes to complete each type of offering can vary significantly.
A SPAC merger, for example, can often be completed more quickly than
Deciding on the type of a traditional IPO, which involves a longer and more rigorous regulatory
shares to be offered, process.
pricing strategy, and the
exchange for listing are
critical decisions. Valuation & Dilution
The choice of offering method can also affect the valuation of the
company and the extent of dilution for existing shareholders. SPACs, for
example, may provide more flexibility in negotiating valuation terms
compared to a traditional IPO.

Training – IPO Roadmap for Real Estate Companies

Refreshment
Break
 03
IPO
Challenges
to Consider
Challenge No. 1 Solution

Transition of Control Openness to change

Manage Control Transfer: Clear demarcation of roles

Family-owned real estate companies have a tight knit management structure
dominated by family members. Going public requires relinquishing some Formally defined
control to shareholders and following stricter corporate governance norms. management structure

Disclosure of Control with

clear identification of
Clear Division of Roles:
related parties and conflict
There's a need for a clear division of roles and responsibilities between family
of interests.
members and professional managers or independent directors.

Transparent Ownership Structure

Transitioning control involves navigating complex requirements, such as
disclosing ownership structures, related-party transactions, and potential
conflicts of interest. Failing to address these issues can result in regulatory
scrutiny and legal challenges, potentially jeopardizing the success of the IPO.

Training – IPO Roadmap for Real Estate Companies

Challenge No. 2 Solution

Dilution of Ownership Well defined governance

and control framework
Handling Loss of Grip on the Business:
Going public typically involves issuing new shares to public investors, which Continuation of Corporate
dilutes the ownership stake of existing shareholders, including the founding Strategies
family. With control dilution, existing shareholders may lose voting power,
especially if new shares are issued with voting rights. Expert handling of cultural
changes due to new
shareholders
Cultural Shift
Transitioning from a closely held family business to a publicly traded
company often requires a cultural shift in terms of decision-making
processes, communication norms, and organizational values.

Shifts in Corporate Strategy & Priorities

Significant control dilution can affect the continuation of corporate strategies
as well as long term operational outlook of the company.

Training – IPO Roadmap for Real Estate Companies

Challenge No. 3 Solution

Establishing Corporate Governance Well defined Board of

Directors Structure
Robust Governance Structures
Establishment of solid board level governance structures along with board
Relevant Board Committees
committee (audit, risk, compensation) is imperative for gaining investor
development
confidence and to protect shareholder interests.

Identification of suitably
Right Representation of Directors experienced external board
Public company boards require a different skill set compared to private members
company boards. Right number of non-executive and independent directors
are required on Board to send positive signals to investors.

Enhanced Regulator Scrutiny

Intense individual scrutiny for today’s public company directors, substantial
time and effort is required to identify, appoint and groom a qualified board
of independent directors.

Training – IPO Roadmap for Real Estate Companies

Challenge No. 4 Solution
Strong & Accurate Financial Reporting /
Solid SOPs, ERP
Forecasting Infrastructure, operational
systems
Meeting the Standards of IPO
The accounting infrastructure and systems of a public listed company require greater Experienced & Qualified
detail and technicality as compared to a private company. Before listing, an Staff
organization’s financial, accounting, tax, operational and IT processes, systems and
controls must be able to withstand the rigors and scrutiny of public company status. MIS Reporting, IFRS
Compliant Financial
Statements, Regulatory
Required Reporting Mechanisms Compliance
Before going public, the company should have in place, the infrastructure (of
people, systems, policies, and procedures) which will enable the production
of quarterly and annual reports in compliance with regulations.

Improved Budgeting & Forecasting

Companies need to improve their budgeting and forecasting capabilities, enhance
external financial reporting, prepare to comply with local securities law and
consider potential IPO accounting and reporting issues.
.

Training – IPO Roadmap for Real Estate Companies

Challenge No. 5 Solution
A Winning Line-up Experienced & Qualified
Project Team
Coordination between Teams
Successful transformations into a public company depends largely on a coordinated
effort by internal management and the IPO advisory team. In the case of market Retention of Project team
outperformers in the listed real-estate space, the internal team is in place and throughout the journey
functioning well in advance of the IPO.

Selection of consultants
Right Experience Mix with prior IPO experience
The top managers already have the experience and expertise to undertake
the IPO and operate a publicly listed real-estate company during the whole
process.

Selection of Seasoned Advisors

Identification and on-boarding of experienced advisory consultants is crucial for the
journey as they shall help introduce the right investors, sell the company’s story
and, most significantly, put a value on the business that reflects its position and
potential.
.

Training – IPO Roadmap for Real Estate Companies

Challenge No. 6 Solution
Regulatory Requirements Well-Developed Risk,
Compliance & Legal
Handling Heightened Scrutiny Functions.
Listed real-estate companies are subject to extensive regulatory requirements
regarding financial reporting and disclosure. Family-owned businesses may not be
accustomed to this level of transparency, which can be demanding in terms of time, Thorough understanding of
resources, and potential exposure of sensitive information. regulatory requirements
through an experienced
internal and external team.
Regulatory Compliance
Public listing increases the regulatory requirements multifold and compliance
with a multitude of laws, regulations and reporting protocols is a daunting
task for a non-experienced team.

Training – IPO Roadmap for Real Estate Companies

Challenge No. 7 Solution
Project Management & Timelines Defined processes and
management Control over
Lack of Cohesion & Stakeholder Coordination project activities
An IPO brings together diverse stakeholders and viewpoints from across your
organization. Leadership needs to be able to marshal resources within the
organization, be empowered to make decisions, and know when to rely on (and to Keeping investors engaged
push back on) key advisors. through the investor
relation function

Delays & Slowed Progress

Keeping a range of activities on track to meet the defined deadlines is vital to
maintain investor confidence and to keep potential investors part of the
journey.

Training – IPO Roadmap for Real Estate Companies

Challenge No. 8 Solution
Managing Investor Relations Having a well structured
and experienced investor
Reach across the Aisle relations function.
While a private company does not require investor relations, the function becomes a
major priority for the public company. High-performing companies not only appoint
the right investor relations team, but also listen to it and give it some authority. Conveying the right
sentiment to the market to
keep in interested in the
company.
Conveying the Right Value Proposition
Overall, the company’s investment messaging needs to define the core value
proposition for investors and answer the question, “Why invest now?”

A clear communication is needed for defining the purpose beyond just going
public (e.g., capital raise, brand enhancement, strategic partnerships).

Training – IPO Roadmap for Real Estate Companies

Challenge No. 9 Solution
Pre-IPO Readiness Put in place robust
governance, operational
Focus on the journey and not the destination and IT structures in place
Approach the IPO as a transformational process rather than the endgame or just a
financing event. Begin operating as a public company at least two quarters in advance
of the IPO and have well defined governance and operational structures three quarters Have a well-oiled team in
before that. place to bear the rigors of
the journey.

Getting the Company Ready

Public listing requires a whole lot of documentation in addition to having the
adequate governance structures, workforce, systems, operations and
functions in place which demands a great deal of effort and discipline from
all stakeholders.

Training – IPO Roadmap for Real Estate Companies

Challenge No. 10 Solution
Communicating the Company Story Clearly communicate the
uniqueness of your IPO
Prepare the Sales Pitch story
Investors who understand your industry and know your competitors will wonder what
makes your company special. This makes it’s especially important for management to
be able to clearly articulate the equity story and explain the real-estate company’s Clearly highlight the equity
competitive advantages, governance framework, growth trajectory, and path to advantages your company
profitability. presents to potential
investors

Know your Numbers

Management should continually refine its equity story, supporting it with not
just operating performance, but also the right key performance indicators
(KPIs) and KSA accounting laws

Training – IPO Roadmap for Real Estate Companies

IPO Route
Chart 04
 IPO Journey for Real Estate Companies
The IPO journey unfolds in three distinct phases: Pre-IPO Preparation, IPO Execution & Public Offering and Post IPO life. During the
preparation phase, a company collaborates with external advisors to ready itself for the subsequent public offering phase. Here, shares are
presented to investors, priced, and allocated. The roadmap outlining the essential components of both phases of the IPO process is
outlined below:

Pre - IPO IPO Execution Post IPO

Phase 1: Pre-IPO

Strategy Planning &

Development Preparation

Areas to Consider
Leadership & Timeline &
IPO Strategy Financials Functions Systems Structures
Governance Resources

Key areas to Focus: Key Areas to Focus: Key Areas to Focus: Key Areas to Focus: Key Areas to Focus: Key Areas to Focus: Key Areas to Focus:

▪ IPO General Plans ▪ External Reporting ▪ Management & ▪ HR ▪ IT ▪ Issuing Company ▪ IPO Window
▪ IPO Goals ▪ Forecasting Board of Directors ▪ Internal Audit ▪ Enterprise Risk Structure ▪ Alternative IPO
▪ Offering Options & ▪ IPO Prospectus ▪ Remuneration ▪ Risk & Compliance Management ▪ Company & Legal Options
Objectives ▪ Corporate ▪ Investor Relations ▪ Internal Controls Structure ▪ Internal Resources
Governance
IPO Journey for Real Estate Companies

Pre - IPO IPO Execution Post IPO

Phase 2: IPO Execution

Private Phase Public Phase Listing

Bookbuilding
Application CMA Analysts Investor Allocation &
&
Preparation Interactions Presentations Education Trading
Subscriptions

Required Stage IPO File ITF Pricing

Optional Stage Submission Announcement

Planned Activities (Private & Public Phases): Planned Activities (Listing Phase):
Due Diligence (CDD, FDD, TDD, etc.)
Marketing
Communication Strategy
Pricing & Allocation
Management Compensation & Incentive Plans
Preparation of Analyst Presentation & Roadshow Presentations
Active IPO Execution and Prospectus Drafting

Training – IPO Roadmap for Real Estate Companies

IPO Journey for Real Estate Companies

Pre - IPO IPO Execution Post IPO

Phase 3: Post IPO

On-going Phase – Life as a Listed Real Estate Company

Transparency & Corporate Governance

Investor Relations
Continuing Regulatory & Reporting Obligations

Training – IPO Roadmap for Real Estate Companies

 05
Team Activity

IPO
Negotiation
Simulation
Real Life Scenario: IPO Negotiation Simulation
In this training session, participants will engage in a hypothetical scenario simulating an Initial Public Offering (IPO) negotiation. The scenario
involves two teams: Team 1representing a company seeking investment through an IPO, and Team 2 representing a group of investors
evaluating the investment opportunity.

Team 1 will present their case, outlining their

company's business model, market
opportunity, financial performance, and
expansion plans.
Company Team
They will present this information to the
investor team, highlighting the value Team 2 will review the company’s value
proposition and potential return on investment proposition, financial information, conduct due
for investors. diligence, negotiate the terms of the investment
and ask questions to dig deeper for better
Investor Team understanding.

They will assess the company's valuation, growth

potential, and risk factors to determine the
investment terms that best align with their
objectives.

Through this simulation, participants will enhance their understanding of the IPO process and gain practical skills that can be applied in real-
world investment scenarios.

Training – IPO Roadmap for Real Estate Companies

Team 1 - Company
Shall share plans regarding the following aspects:

Company Overview: We are renowned for pioneering innovative and sustainable

projects that not only set industry benchmarks but also redefine the standards for
quality and functionality.

Differentiation: Our community-focused approach is a hallmark of our

developments, integrating green spaces and amenities that enhance the well-being
of residents and set us apart in the market.

Financial Performance: With a track record of strong revenue growth and healthy
profit margins, we demonstrate financial stability and a sound investment
opportunity.

Expansion Plans: Our strategic focus is on developing new projects that meet the
evolving needs of urban areas, ensuring our continued growth and market relevance.

Use of Funds: The funds raised will be utilized to accelerate our expansion plans,
focusing on developing new projects and investing in technology and innovation to
maintain our competitive edge.

Conclusion: In conclusion, we are well-positioned for growth, driven by our commitment

to excellence and the positive impact we create within the communities we serve.

Training – IPO Roadmap for Real Estate Companies

 Team 2: Investor
Shall assess the investment opportunity presented to them on following aspects:

Market Opportunity
• What specific demographic or urbanization trends are driving the demand for your
developments?
• How do you assess the sustainability of your projects and ensure they meet
environmental standards?

Company Overview
• What is your competitive advantage compared to other real estate development
companies?
• How do you select projects and ensure they align with your mission and values?

Differentiation
• How do you measure the success of your community-building efforts?
• How do you incorporate feedback from stakeholders into your development plans?

Financial Performance
• What strategies do you have in place to maintain or improve your profit margins in the
future?
• How do you manage financial risks, such as fluctuations in the real estate market?

Training – IPO Roadmap for Real Estate Companies

 Team 2: Investor
Expansion Plans

• How do you prioritize and select new projects for development?

• What criteria do you use to assess the feasibility and potential profitability of
new projects?
• How do you plan to balance your ambitious expansion plans with the need to
manage financial risk?

Use of Funds

• Can you provide a detailed breakdown of how you plan to allocate the funds
raised from this investment?
• How do you plan to measure the return on investment for the funds allocated
to technology and innovation?
• Can you discuss any potential risks or challenges associated with your planned
use of funds?

Conclusion

• How do you plan to maintain and strengthen relationships with investors and
other stakeholders over the long term?
• Can you discuss any specific milestones or goals you have set for the future?
• How do you envision the company's impact on urban living and communities
evolving in the coming years?

Training – IPO Roadmap for Real Estate Companies

Thank You