Nomu market: First destination for family businesses to go public
At the last Capital Market Authority (CMA) forum on Nov. 24, I moderated a session on the parallel market “Nomu” as the first destination for a family business journey into public listing. It was a good opportunity to compare notes between the Saudi Nomu market and the AIM market of the UK. During its initial phase more than 25 years ago, the AIM market went through an unpredictable phase, similar to the initial phase of the Nomu market.
At the launch of the Nomu market on Feb. 26, 2017, there was a batch of nine companies listed simultaneously on that day during a ceremony with officials from the CMA, Ministry of Commerce, the General Authority for Small and Medium Enterprises (Monshaat), and Tadawul.
BMG Financial Group was represented there as the financial adviser to one of the companies listed that day. During the following year only one company was listed on the Nomu market, while in 2019, to the surprise of many investment bankers and financial advisers, no company was listed. During this year, only two companies have been listed to date.
Interestingly, between 2017 and now, the statistics are showing a different picture of the Nomu market. The market value of listed companies has almost quadrupled. By the end of 2017, the Nomu market value was SR2.26 billion ($602 million), while in Q1 2020 the value was SR8.2 billion.
In terms of its capped index, the Nomu market closed at 3,140 points in 2017 while it closed at 16,158 points by Q3 2020. As for transactions traded and their values, there were more than 78,000 transactions executed with total values reaching SR1.8 billion in 2017, while by Q3 2020 transactions executed have reached more than 200,000 with values of shares traded reaching SR4.36 billion.
At a recent dinner, which included CEOs and senior executives of publicly listed companies as well as heads of family businesses, there was a heated debate on the rational of going public and the optimum time to do so. As someone who has been preaching to owners of family businesses to go public, I expressed my strong views on the advantages of going public and highlighted the features of the Nomu market as the first destination for public listing.
Since its inception, the Nomu market has gone through enhancements and modifications to make it more attractive and user-friendly, coupled with financial incentives offered by Monshaat. Currently, we at BMG Financial Group have more than 10 companies in the pipeline that have showed strong interest in public listing via the Nomu market.
Given current market dynamics, this is a good time for medium-size family businesses to consider listing on the Nomu. CMA, Tadawul and Monshaat are offering multiple options and incentives to encourage medium-size family companies to be listed on the Nomu.
I highly recommend owners and managers of family businesses to explore these options and incentives.
• Basil M.K. Al-Ghalayini is the chairman and CEO of BMG Financial Group.