Almarai's Strategic Expansion through Dollar Trust Certificates: A Deep Dive into Financial and Operational Implications for Investors

Saudi Arabia's Almarai, the kingdom's largest dairy company, has embarked on an ambitious $4.8 billion expansion plan through 2028, targeting poultry, dairy, and emerging food segments like frozen products and seafood Saudi's Almarai to invest $4.8bn until 2028 to expand operations^[1]. To fund this growth, the company has turned to U.S. dollar-denominated trust certificates under its $2 billion Trust Certificate Issuance Programme, with the 2025 offering managed by Citigroup, HSBC, and other major banks Almarai begins issuance of US dollar-denominated trust certificates^[2]. For investors, this raises critical questions: How does this financing strategy align with Almarai's operational goals? What risks and opportunities does it present?

Strategic Rationale: Aligning Debt with Long-Term Growth

Almarai's five-year plan is explicitly tied to Saudi Vision 2030, aiming to reduce food imports and bolster self-sufficiency Saudi's Almarai to invest $4.8bn until 2028 to expand operations^[1]. The company's investment in poultry, for instance, targets a 50–70% production increase by 2026, processing 450 million birds annually Dairy firm Almarai to invest over $4.8 bln under five-year plan^[3]. Meanwhile, $4 billion of the $4.8 billion will strengthen supply chains and regional distribution, critical for scaling operations beyond Saudi Arabia Almarai Approves a Strategic Plan for the Next Five Years^[4].

The trust certificate programme, first utilized in 2023 with a $750 million issuance offering a 5.233% annual return Almarai begins issuance of US dollar-denominated trust certificates^[2], provides a flexible, dollar-denominated funding source. This is particularly strategic in a market where local riyal debt may be constrained by regulatory limits or currency volatility. By accessing international capital markets, Almarai mitigates refinancing risks while securing competitive rates, especially in a low-interest-rate environment.

Financial Implications: Cost of Capital and Liquidity

The 2025 issuance, though yet to finalize terms, follows a structure that prioritizes investor accessibility: a minimum subscription of $200,000 with increments of $1,000 Almarai begins issuance of US dollar-denominated trust certificates^[5]. This democratizes participation compared to traditional sukuk or private placements, potentially broadening the investor base. However, the lack of disclosed interest rates for the 2025 certificates—unlike the 2023 issuance—introduces uncertainty. If rates rise due to global monetary policy shifts, Almarai's cost of debt could outpace returns from its expansion projects, squeezing margins.

For investors, the key metric is the alignment between the proceeds and the strategic plan. While the base offering circular states funds will be used for “general corporate purposes” Almarai Company announces its intention to issue Trust Certificates^[6], the absence of explicit project-level allocation details raises concerns about transparency. A 2023 Reuters report noted that Almarai's expansion hinges on operational cash flows, suggesting the trust certificates may supplement—not replace—internal financing Saudi's Almarai to invest $4.8bn until 2028 to expand operations^[1]. This dual approach could stabilize cash flow but may also dilute the urgency to optimize debt usage.

Operational Risks and Market Dynamics

Almarai's expansion into new food segments, such as red meat and seafood, carries inherent risks. These markets are highly competitive and subject to regulatory scrutiny, particularly in export-oriented regions. For example, Saudi poultry exports face tariffs in key markets like the EU, which could limit the scalability of Almarai's poultry ambitions Dairy firm Almarai to invest over $4.8 bln under five-year plan^[3]. Additionally, the company's reliance on dollar-denominated debt exposes it to foreign exchange risks if the riyal appreciates, increasing the real cost of repayment.

On the positive side, Almarai's partnerships with global banks like J.P. Morgan and Standard Chartered signal strong market confidence. These institutions not only underwrite the certificates but also provide strategic advisory services, potentially enhancing the company's operational efficiency. Furthermore, the 10-year maturity of the 2025 issuance offers a long-term funding horizon, aligning with the five-year strategic plan and reducing short-term refinancing pressures Almarai begins issuance of US dollar-denominated trust certificates^[5].

Conclusion: A Calculated Bet for Patient Investors

Almarai's trust certificate programme represents a calculated financial strategy to fund a transformative expansion. For investors, the appeal lies in the company's alignment with Saudi Vision 2030 and its diversified approach to capital raising. However, the lack of granular details on interest rates and project-specific allocations necessitates caution. Those willing to tolerate moderate risk for exposure to a sector—food security—that is central to Saudi Arabia's economic future may find this issuance compelling.

As the company navigates global market conditions and regulatory approvals, the success of this strategy will ultimately depend on its ability to convert borrowed capital into operational efficiencies and market share gains. For now, the trust certificates offer a unique window into Almarai's ambition—and a potential avenue for investors to participate in its growth.