Arabian Pipes Wins CMA Nod for 26% Capital Hike via Bonus Issue

The Capital Market Authority approved Arabian Pipes Co.'s plan to raise capital by 26% through a bonus share issue, the regulator said Tuesday.

The Riyadh-based pipe maker will increase its capital from SAR 200 million to SAR 252 million by issuing 52 million new ordinary shares. The move capitalizes SAR 52 million from retained earnings. Shareholders get one bonus share for every four shares held.

Two million of the new shares go to the company's employee stock incentive plan, representing 1% of pre-increase capital. The remaining 50 million shares go to shareholders registered with the Securities Depository Center by the close of the second trading day after the record date, which the board will set later.

Arabian Pipes' board recommended the increase in February. The company must hold an extraordinary general meeting within six months of Tuesday's approval, the CMA said. The EGM needs to satisfy all regulatory requirements before the bonus shares can be distributed.

The capital boost strengthens Arabian Pipes' equity base for future growth, according to the company's filing. The pipe manufacturer operates in the energy and infrastructure sectors, supplying welded steel pipes for oil, gas, and water projects.

Bonus issues do not change a company's market value or shareholder equity – they increase the share count while proportionally reducing the price per share. For Arabian Pipes, the 26% increase in outstanding shares will dilute earnings per share at the same rate unless net income rises correspondingly. The move signals management's confidence in the company's retained earnings position and its ability to fund growth without external capital.

Shareholders should watch for the record date announcement and the EGM timeline. The six-month window gives the board flexibility to schedule the meeting around operational priorities and market conditions.