After the resounding success of the Saudi Aramco bond, the next big test for the Kingdom in the international investment arena comes with Arabian Centers Co. (ACC), the leading malls operator looking to list on the Tadawul in Riyadh’s biggest initial public offering (IPO) since 2014. Although the IPO is domestic, the marketing is international. The army of advisers includes Saudi institutions like Samba Capital and NCB Capital, but ACC has also enlisted the advice of Morgan Stanley and Goldman Sachs, among others, for the foreign element. Some 20 percent of the company — a mix of existing and new shares — will be listed, but the company expects roughly half of this to be bought by investors in Europe and the US, with most of the rest slated for local institutions. Some 10 percent of the listing is earmarked for Saudi retail investors, if they want it. If all goes to plan — ACC executives are on the road in the UAE, Britain and US this week marketing the offer — pretty soon the book-building demand will be known, within a range of SR26 to SR33 per share.That will equate to a value of around $836 million at the upper end, and a market capitalization of up to $4.2 billion — a little lower than suggestions when ACC announced its intention to float a couple of weeks ago, but there is not much to be read into that. The amount raised at the top end will be used to pay down debts, giving ACC leeway to fund further expansion. For a Saudi or regional institution, it looks like a pretty straightforward investment decision. ACC is a well-known regional brand, operating malls across the Kingdom, with prime-site presence in the big cities. It is currently owned and run by the Al-Hokair family, among the best known of Saudi trading families. Saudi retail is different from the other big consumer markets in the region, notably the UAE with its gigantic and world-famous malls. There, retail is largely a tourism play — if you think more tourists are going to come the Dubai, for example, you can pretty much predict the health of the retail market. In the Kingdom, retail is largely a domestic business, catering to the big population, and as such is subject more to macro-economic considerations. Saudis are enthusiastic shoppers, but even they have tempered their spending habits in the Kingdom during the past couple of years of oil-price and VAT-prompted parsimony. There is some evidence that corner has been turned. Retail experts in Riyadh last week said that figures for early 2019 showed that footfall was recovering. Government salaries — still the biggest element of the national pay bill — have stood up pretty well in a period of relative austerity. Add to the equation the fact that mall retail has been transformed by the relaxation of gender mixing rules, and the introduction of cinemas into the leisure mix. Gulf investors will look at all this, and the high margins that ACC enjoys, and will probably decide the IPO is well worth going for. But why should an investor in New York or London do the same? ACC is asking them to back the Saudi vision of a transformed society and economy, when many of them would not fully understand the subtle processes at work in the Kingdom, especially if they get their information from blinkered Western media. As the 893-page prospectus published on Sunday makes clear, there are several financial reasons they should. ACC has a high-margin business, with strong cash flow and a commitment to dividends. In fact, the IPO documents should reassure foreign investors in one other crucial area, too. Every share prospectus has voluminous chapters devoted to potential risks — it is the advisers’ way of covering their backs in case of any unforeseen problems. The ACC has a big section devoted to risks too, but none of them seem anything out of the ordinary — just fairly routine warnings about the macro-economy, tax regime, commercial climate and other factors, no different in substance from any other share offering. The big global investors can take reassurance from that, and will surely appreciate a chance to get in at an early stage of the Kingdom’s transformation strategy. We will know by May 9, when the book-building exercise closes.