Tadawul listing after 2021 highlights Saudi IPO resurgence

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. (Screenshot/Supplied)
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. (Screenshot/Supplied)
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Updated 12 December 2020

Tadawul listing after 2021 highlights Saudi IPO resurgence

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. (Screenshot/Supplied)
  • Kingdom’s capital market set for ambitious year after pandemic ‘test’

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.”


Banque Misr to get largest syndicated loan in its history at $1bn, reports CNBC

Banque Misr to get largest syndicated loan in its history at $1bn, reports CNBC
Updated 17 sec ago

Banque Misr to get largest syndicated loan in its history at $1bn, reports CNBC

Banque Misr to get largest syndicated loan in its history at $1bn, reports CNBC

RIYADH: Egypt's Banque Misr is in the process of obtaining the largest syndicated loan in its history — about $1 billion — to pay off financing obtained in 2018, banking sources told CNBC Arabia.

The second-largest governmental bank in the country in terms of assets is getting a record turnout by banks to provide financing, and will use the loan to pay off a $550 million financing obtained in December 2018, the sources said.

The bank's initial plan was to obtain the same amount of financing that it would have to pay back, but later raised the size of the loan amid a rush from banks to provide the joint sum.

Al Ahli Bank of Kuwait, Emirates NBD, First Abu Dhabi Bank and Standard Chartered are among the banks working as arrangers, private sources said.

Banque Misr deputy, Akef El Maghraby, has previously said the bank will launch a number of funds by the end of this year in the real estate, health and FinTech sectors.

Going digital

Meanwhile, Banque Misr plans to launch Egypt’s first digital bank by the first quarter of 2022, El Maghraby told Masrawy on Sunday.

The Central Bank of Egypt is still working on a regulatory framework governing digital banks, he said.

Misr Digital Innovation, a subsidiary of Banque Misr set up last year to launch the bank, has signed a seven-year partnership agreement with Visa that will see it issue the iconic branded cards, use its APIs, and work with it on marketing and design, the company said in a separate statement.


Indonesia wrestles with lure of lucrative coal industry and greener vision

Indonesia wrestles with lure of lucrative coal industry and greener vision
Coal barges at Mahakam river, Samarinda, Indonesia. Image: Shutterstock
Updated 29 min 7 sec ago

Indonesia wrestles with lure of lucrative coal industry and greener vision

Indonesia wrestles with lure of lucrative coal industry and greener vision
  • Indonesia, the eighth-biggest carbon emitter, recently brought forward its goal for net zero emissions from 2070 to 2060 or sooner
  • With nearly 39 billion tonnes of reserves, coal remains the economic backbone of parts of Indonesia and miners are among the biggest taxpayers

As Indonesia wins cautious praise from some green groups for ambitious plans to cut carbon emissions, the world's biggest exporter of thermal coal is grappling with its commitment to a greener future.


Indonesia, the eighth-biggest carbon emitter, recently brought forward its goal for net zero emissions from 2070 to 2060 or sooner, ahead of the United Nations Climate Change Conference in Glasgow in November, and joined a U.S.-led Global Methane Pledge.

Indonesia is wrestling with how to balance its environmental targets with the cost of pulling the plug on an industry that contributed $38 billion in export earnings in the first seven months of 2021.


It also plans to stop commissioning new coal-fired power plants and phase out coal for electricity by 2056 under a new, greener, long-term economic vision.


"We are phasing out coal power plants. But if you ask whether we're closing down mines, we have the coal and there are other utilisation options," Dadan Kusdiana, the energy ministry's head of renewable energy, told Reuters.

Indonesia is exploring ways to keep consuming and extracting value from coal by using carbon capture and storage (CCS) technology, although environmentalists say CCS is unproven and expensive.

COAL GASIFICATION


With nearly 39 billion tonnes of reserves, coal remains the economic backbone of parts of Indonesia and miners are among the biggest taxpayers.


The government has been encouraging miners to invest in production of dimethyl ether (DME) from coal. Under new laws passed in 2020, it no longer requires them to pay royalties to the government on such processes, and their mine permits can be extended.


It has touted DME as a replacement for imported liquefied petroleum gas and a feed stock for chemicals and fertilizer.


Making DME requires burning coal, so it needs to be paired with CCS to be environmentally friendly, Dadan said.


However, if Indonesia can adopt CCS more widely and cheaply, the technology could also be applied to coal power plants, extending their usage, he said.


He said that although using CCS technology is feasible, there is risk of leakage in trying to capture emissions from burning and mining coal.

RECORD PRICE 


Coal power generation is Indonesia's second-biggest emissions source after deforestation, contributing 35 percent of its 1,262 gigatonnes of CO2 equivalent a year, government data showed.


Indonesia consumes about 130 million tonnes of coal annually to fuel 60% of its 73 gigawatt (GW) electricity capacity, and exports about three times that amount.


Renewable sources like solar, hydro and geothermal make up just 11 percent of its energy mix, even though experts say Indonesia has 400 GW of renewable potential.


The government has pledged to increase the renewable share to 23 percent by 2025. 


Coal power remains the cheapest option.  Coal prices hit all-time highs this year, helping Indonesia book record exports and a trade surplus in August. The government raised its 2021 coal output target by 14 percent to 625 million tonnes to cash in.


Cerah and other green groups have campaigned to retire coal plants early, but officials have said this could trigger fines for breaching contracts with independent power producers.

On the flip side, parliament is reviewing a government-proposed carbon tax, and Indonesia has ambitious plans to use its nickel reserves to become a production hub for batteries and electric vehicles.

 


Saudi Arabia's blockchain market to grow 41 percent by 2025

Saudi Arabia's blockchain market to grow 41 percent by 2025
Updated 20 September 2021

Saudi Arabia's blockchain market to grow 41 percent by 2025

Saudi Arabia's blockchain market to grow 41 percent by 2025

Saudi Arabia's blockchain market is expected to grow by 41 percent between 2021 and 2025, according to estimates of the Kingdom's communications sector regulator.

The blockchain market surge is part of wider expected growth in the IT and emerging technology sector that will hit SR100 billion by 2025, with an annual compound growth rate of 10 percent, Saudi Press Agency reported, citing Raed Alfayez, vice-governor of emerging technologies at the Commission of Information Technology and Communication.

The market today has a size of SR65 billion, he added.

 


Surge in MENA’s SPAC activity counters IPOs drop, says Ernst & Young

Surge in MENA’s SPAC activity counters IPOs drop, says Ernst & Young
Updated 20 September 2021

Surge in MENA’s SPAC activity counters IPOs drop, says Ernst & Young

Surge in MENA’s SPAC activity counters IPOs drop, says Ernst & Young

Middle Eastern businesses are increasingly making use of the alternative route to public listing known as SPACs, a report by Ernst & Young has claimed.

The analysis shows a rise in activity involving special purpose acquisition companies (SPACs) and MENA-based firms.

SPACs are publicly listed companies created with the sole purpose of purchasing privately owned businesses, which therefore leads to its target to be listed. 

As well as private companies, sovereign wealth funds in the Middle East — including Saudi Arabia’s Public Investment Fund (PIF) and Abu Dhabi’s Mubadala — have also made use of SPACs, with PIF investing USD$75 million in NYSE-listed Compute Health in February.

Gregory Hughes, Ernst & Young MENA IPO and transaction diligence leader, said: “IPO activity during H1 2021 was below expectations, nevertheless the year did bring some remarkable deals with MENA companies showing an ever-increasing interest in SPAC transactions as a means to go public. We expect this trend to continue as companies seek to increase their international presence and gain access to a wider pool of investors.”

Among the MENA companies to go public this year after merging with SPACs were Abu Dhabi-based music streaming platform Anghami, and Dubai-headquartered transit firm Swvl Inc.

While SPAC activity was surging, the proceeds from initial public offerings (IPOs) across the region saw a year-on-year drop of 48 percent in the first half of 2021. 

Four IPOs raised USD$425.8 million, even though the number of listings stayed the same as 2020. 

Matthew Benson, EY MENA Strategy and Transactions Leader said that despite the drop, his company’s outlook on the region’s IPO activity “remains positive”.


World shares slide to a one-month low as uncertainty grips markets

World shares slide to a one-month low as uncertainty grips markets
Image: Shutterstock
Updated 52 min 26 sec ago

World shares slide to a one-month low as uncertainty grips markets

World shares slide to a one-month low as uncertainty grips markets
  • European shares sank 1 percent to a near two-month low on Monday
  • The benchmark European stocks index has now fallen for three straight weeks on worries about slowing global growth

World shares skidded and the dollar firmed on Monday ahead of a week packed with global central bank meetings, while debt troubles at property group China Evergrande dragged Hong Kong stocks towards to a one-year low.

European shares sank 1.8 percent to a two-month low on Monday, tracking Asian equities lower, with energy and mining stocks tumbling as the dollar's jump to near four-week highs crushed commodity prices.


Holidays in Japan, China and South Korea meant trading was thin in Asia, while politics added extra uncertainty with elections in Canada and Germany bookending the week.


Shares in China Evergrande plummeted 12 percent after earlier losing as much as 19 percent to more than 11-year lows.

The company's listed units also fell, as investors worried about the real estate developer's ability to repay a small portion of its $305 billion debt due this Thursday.


Evergrande's troubles added to growing concerns about the health of China's economy after Beijing's recent crackdown on tech firms. The Hang Seng index shed 3.5 percent, while Singapore-traded FTSE China futures fell 3 percent.


MSCI's broadest index of Asia-Pacific shares outside Japan slid 1.7% to its lowest since August 24, with Australia stocks, in their worst session in nearly seven months, slumping 2.1 percent.


The MSCI All Country World Index lost 0.5 percent, close to a one-month low and down further from record highs hit earlier this month.