RIYADH: Tadawul, the Saudi stock exchange, next year will start laying the groundwork for its own initial public offering (IPO), with the launch expected some time after 2021, but it is unlikely to be the only big listing as the Kingdom evolves to become a big player on the global capital market.
Khalid Abdullah Al-Hussan, CEO and board member of Tadawul, confirmed the long-awaited share sale will take place after 2021, depending on the progress of initial preparations.
Speaking at a webinar organized by Bloomberg, Al-Hussan said 2020 had been “an exceptional year,” but he believed “the market reacted proactively” to the impact of the coronavirus (COVID-19) pandemic.
As an example of the bourse’s resilience, he pointed to the fact that Tadawul, which was established in 2007 and is 100 percent owned by the Public Investment Fund (PIF), in August launched the Kingdom’s first exchange-traded derivatives market and clearing house, part of its strategy to make its equity markets more attractive to foreign investors.
Using Nasdaq technology, the Saudi Futures 30 (SF30) Index Futures Contract is based on the MSCI Tadawul 30 (MT30), the first exchange-traded derivatives product.
This is a significant step in introducing sophisticated market products and creating a trading environment that is attractive to local as well as international investors, Al-Hussan said.
“We are ambitious to continue, despite the crisis,” he said.
As well as his company’s own listing, he expressed hope that 2021 will be an important year for IPOs in the Kingdom.
“Very soon we will have it. I see this coming,” he said.
Speaking at the same event on Thursday, Ammar Al-Khudairy, chairman of Samba Financial Group, echoed Al-Hussan’s optimism. “A nice number (a dozen or so) of IPOs are coming up in 2021,” he said.
Referring to the headline-grabbing Aramco listing, Al-Khudairy said that one year on from the world’s biggest-ever IPO, which took place on the Saudi exchange, “we are now operating against the backdrop of a recovery agenda.”
“We have shown the world that we are capable of big IPOs. We have firepower. We should start thinking as a big player, as a regional player, if not global,” he said.
Al-Khudairy hailed his bank’s merger with the Saudi National Commercial Bank (NCB) as an important development in the Kingdom’s financial sector. “The size is important; size matters in banking, the empirical data is encouraging,” he said.
Following the merger, the new entity will control 26 percent of the market for retail loans and 29 percent of the market in retail liabilities.
All these positive developments are further proof that the Kingdom has one of the leading capital markets in the world, with considerable progress taking place amid the pandemic, Mohammed El-Kuwaiz, chairman of the Capital Markets Authority (CMA), said during the online event.
“It was a test of reform initiatives,” he said of the experience of living through the coronavirus outbreak. “We have seen significant pick-up in second half of the year in daily traded values,” he added.
El-Kuwaiz said the CMA waded through the worst of the COVID-19 impact by focusing on increasing levels of regulation in governance, disclosure and enforcement. The Saudi capital market has been stable, and has started to attract more local and international investors, he added.
The Bloomberg Capital Markets Forum Saudi Arabia brought together some of the Kingdom’s leading financial decision makers, including Muneera Al-Dossary, CEO of Mulkia Investment and a board member in the Saudi Industrial Services Company (SISCO); and Karim Tannir, head of investment banking for the Middle East and North Africa, co-head of MENA Company, JPMorgan. It was moderated by Yousef Gamal El-Din, anchor of “Bloomberg Daybreak.”