Saudi Cabinet approves mining agreements with Jordan, Gabon, and Zimbabwe

Saudi Cabinet approves mining agreements with Jordan, Gabon, and Zimbabwe
The Saudi Cabinet was chaired by Crown Prince Mohammed bin Salman. SPA
Short Url
Updated 10 July 2024

Saudi Cabinet approves mining agreements with Jordan, Gabon, and Zimbabwe

Saudi Cabinet approves mining agreements with Jordan, Gabon, and Zimbabwe

RIYADH: Mining agreements with Jordan, Gabon, and Zimbabwe were signed off by the Saudi cabinet, and a range of economic deals were rubber-stamped.

Approved during the meeting chaired by Crown Prince Mohammed bin Salman, these deals come as the Kingdom seeks to increase the mining sector’s contribution to gross domestic product to between $70 billion and $80 billion by 2030, up from the current level of $26 billion.

Other agreements include cooperation deals with China on modern transportation, Singapore on halal product quality, and the African Civil Aviation Commission, according to the Saudi Press Agency.

The efforts fit in with Saudi Arabia’s economic diversification plan, which has already witnessed non-oil economic activity contributing 50 percent to the nation’s GDP in 2023.

Furthermore, the Cabinet reviewed a range of general topics, including the annual reports of the Ministry of Tourism and the Cultural Development Fund, and took necessary actions to advance these sectors. 

Minister of Information Salman bin Yousef Al-Dosari underscored the discussions, emphasizing ongoing initiatives to enhance infrastructure, improve service quality, develop key sectors, and attract investments. These efforts aim to stimulate national industries and foster sustainable economic growth. 

Moreover, the Cabinet discussed finalizing a memorandum of understanding with Greece on communications and information technology between their respective commissions. 

Another approved deal was between Saudi Arabia and Singapore to enhance human capital and leadership in their public sectors through cooperative efforts.   

Additionally, an MoU on cultural cooperation was finalized between the Ministry of Culture in Saudi Arabia and the Bahrain Authority for Culture and Antiquities.  

In addition to these agreements, the Cabinet also cleared financial statements for the past fiscal years of the General Authority for Survey and Geospatial Information, the Digital Government Authority, and Imam Muhammad bin Saud Islamic University. 

These meetings were conducted within the framework of strengthening friendship ties and enhancing bilateral and multilateral cooperation across all fields. The focus was particularly on promoting international security and stability, and advancing principles of development, progress, and cultural advancement. 

The meeting commended efforts to increase participation of Saudi men and women in development initiatives, enhance integration of the national workforce, and strive toward achieving Vision 2030’s goal of reducing unemployment to 7 percent. 

SNB Capital among banks set to lead IPO of Nupco

SNB Capital among banks set to lead IPO of Nupco
Updated 15 July 2024

SNB Capital among banks set to lead IPO of Nupco

SNB Capital among banks set to lead IPO of Nupco

RIYADH: Saudi Arabia's Public Investment Fund has appointed SNB Capital as one of the banks leading on a planned initial public offering of the Kingdom's largest medical procurement firm, Arab News can confirm.

A spokesperson for SNB Capital verified its involvement in the listing process of the National Unified Procurement Co., which could raise up to $1 billion from the sale of a 30 percent stake in the company.

The bank was one of three mentioned in a report by Bloomberg, which also claimed JPMorgan Chase & Co. and Morgan Stanley would be involved in the IPO, although neither of those institutions could be reached by Arab News for a comment.

The deal could come as soon as this year, Bloomberg said.

The IPO reflects investor confidence in Saudi Arabia’s economic reforms and the healthcare sector’s growth potential.

It also underscores the Kingdom’s commitment to attracting foreign investment and promoting private sector participation in its economy.

Founded in 2009, Nupco plays a crucial role in Saudi Arabia's healthcare sector by centralizing procurement and logistics services for medical supplies and pharmaceuticals.

This initiative aligns with the Kingdom’s Vision 2030, which aims to diversify the economy and reduce its dependence on oil revenues.

The IPO of Nupco is part of a broader strategy by the PIF to monetize its assets and invest in various sectors to drive economic growth and development.

The PIF, chaired by Crown Prince Mohammed bin Salman, has been at the forefront of transforming Saudi Arabia’s economic landscape through substantial investments in sectors such as technology, entertainment, and tourism.

Healthcare development is one of the key pillars of Vision 2030 including boosting the pharmaceutical sector.

In June, Saudi healthcare group Dr. Soliman Abdel Kader Fakeeh Hospital Co. raised $763 million in a Riyadh IPO in June, closed at 10 percent above its offering price of SR57.5 ($15.3) in Riyadh.

Oman sees hotel revenue rise 10.2% thanks to European-led tourist surge 

Oman sees hotel revenue rise 10.2% thanks to European-led tourist surge 
Updated 15 July 2024

Oman sees hotel revenue rise 10.2% thanks to European-led tourist surge 

Oman sees hotel revenue rise 10.2% thanks to European-led tourist surge 

RIYADH: European travelers to Oman helped fuel a 10.2 percent rise in hotel revenue in the first five months of 2024, official data has revealed.

Figures from the National Centre for Statistics and Information show that three to five-star facilities in the country pulled in over 108.3 million Omani rials ($281.5 million) over the period, compared to 98.3 million rials in 2023.

Revenue growth was fueled by a 13.7 percent surge in the total number of hotel guests, with 286,980 European visitors — a 19.6 percent increase over the first five months of 2023.

Simultaneously, the hotel occupancy rate rose by 6 percent to reach 51.5 percent, compared to 2023.

Oman’s substantial increase in European visitors and strong local and regional turnout mirrors the broader strategy of diversifying tourist demographics and bolstering the hospitality sector seen across the GCC.

Similar to Oman, Saudi Arabia has topped the UN Tourism’s ranking for the growth of international tourist arrivals in 2023 compared to 2019 among large destinations, achieving an increase of 56 percent over that tiem, according to the World Tourism Barometer report released in January.

The NCSI report provides a detailed breakdown of the nationalities among the hotel guests in Oman during the first five months of 2024.. 

Among them, 306,255 were Omani citizens, reflecting a substantial local turnout with an 11 percent surge.

The number of Gulf Cooperation Council citizens visiting the Sultanate also increased, reaching 58,572 guests, up 6.8 percent comparted to the same period in 2023.

Additional Arab tourists contributed to the growth, with 40,548 travelers, marking a modest but positive 13.2 percent increase.  

Citizens from African countries demonstrated strong interest, with a rise of 1.6 percent, resulting in 4,677 visitors. 

Guests from the US also significantly contributed to the tourism growth, with the number of travelers reaching 28,695.

Additionally, guests from Oceania countries totaled 13,446 visitors.  

In addition, Oman’s airports handled more than 4.9 million passengers and 31,708 flights by the end of April.

Muscat International Airport saw 4.4 million passengers, a 16.8 percent increase, with 4.09 million international and 332,391 domestic passengers.

Indians topped the number of passengers through Muscat International Airport by the end of April, with 89,206 arrivals and 83,855 departures. 

They were followed by Bangladeshi nationals with 12,829 incoming and 20,597 outgoing passengers, and Pakistani nationals with 21,191 arrivals and 19,532 departures.

Sohar Airport served 22,390 passengers on 192 flights, while Duqm Airport carried 20,106 passengers on 208 flights.

Closing Bell: Saudi main index gains 66 points to 11,948 

Closing Bell: Saudi main index gains 66 points to 11,948 
Updated 15 July 2024

Closing Bell: Saudi main index gains 66 points to 11,948 

Closing Bell: Saudi main index gains 66 points to 11,948 

RIYADH: Saudi Arabia’s Tadawul All Share Index continued its upward movement on Monday, as it gained 66.15 points to close at 11,947.70.  

The total trading turnover of the benchmark index was SR7.18 billion ($1.91 billion), with 105 of the listed stocks advancing and 116 declining.  

On the other hand, Saudi Arabia’s parallel market Nomu edged up by 0.60 percent to close Monday’s trading at 25,849.92.  

The MSCI Tadawul Index also gained 9.83 points to 1,497.85.  

The best-performing stock on the main market was Al Sagr Cooperative Insurance Co. The firm’s share price surged by 10 percent to SR20.68.  

Other top performers were National Gas and Industrialization Co. and Aljazira Takaful Taawuni Co., whose share prices soared by 6.01 percent and 5.32 percent, respectively.  

Similarly, the share prices of Makkah Construction and Development Co. and United Cooperative Assurance Co. also increased by 4.77 percent and 3.72 percent, respectively.  

The worst performer of the day was Al Taiseer Group Talco Industrial Co., as its share price dropped by 7.72 percent to SR65.70.  

On the other hand, the positive performance of Nomu on Monday was driven by Future Care Trading Co. and National Building and Marketing Co., whose share prices surged by 10.34 percent and 10 percent, respectively.  

The worst performer on the parallel market was Ladun Investment Co. The firm’s share price slipped by 7.42 percent to SR2.87.  

On the announcements front, Sure Global Tech Co. said it signed a contract worth SR51.99 million to develop a digital platform for the Entrustment and Liquidation Center, also known as Infath.  

In a Tadawul statement, the company said that the three-year contract will have a positive impact on its financials from 2024 through 2026.  

Meanwhile, Naseej for Technology Co. announced that it signed a contract worth SR11.3 million with the National eLearning Center.  

According to a Tadawul statement, the scope of the contract includes managing and operating NELC’s learning management system to enhance confidence in e-learning and lead sustainable innovation in Saudi Arabia.  

The statement added that the contract which is valid for 36 months is expected to positively impact Naseej Tech’s financial performance in 2024, 2025, and 2026. 

Saudi Arabia leads GCC IPO market with $2.1bn raised in first half of 2024: Markaz

Saudi Arabia leads GCC IPO market with $2.1bn raised in first half of 2024: Markaz
Updated 15 July 2024

Saudi Arabia leads GCC IPO market with $2.1bn raised in first half of 2024: Markaz

Saudi Arabia leads GCC IPO market with $2.1bn raised in first half of 2024: Markaz

RIYADH: Saudi Arabia led the Gulf Cooperation Council’s initial public offering market in the first half of 2024, raising $2.1 billion in what was an annual increase of 141 percent, an analysis has revealed.

In its latest report, Kuwait Financial Center, also known as Markaz, noted that the Kingdom saw 19 offerings in the six months to the end of June, accounting for 59 percent of the total IPO proceeds in the GCC region. These included $1.95 billion listed in its main market and $143 million in the parallel market, also known as Nomu. 

Saudi Arabia’s ambitious privatization and diversification efforts across sectors such as healthcare, technology, and renewable energy have significantly broadened the market’s appeal.  

These initiatives offer investors exposure to high-growth industries, positioning the Kingdom as an attractive destination for investment in sectors poised for substantial development and innovation. 

Led by its pivotal Capital Market Authority advancing Vision 2030 goals, the Saudi capital market is on a journey of expanision, and saw net foreign investment reach SR198 billion ($52.79 billion) in 2023 – a 7.7 percent annual increase, according to CMA’s June report. 

Top IPOs 

Among the top five GCC IPOs by proceeds in the first half of this year, the Markaz report noted that Dr. Soliman Abdulkader Fakeeh Hospital Co., listed on Saudi Arabia’s main market, raised $764 million, making it the largest IPO during that period. 

The healthcare firm offered 49.8 million shares, representing a 21 percent stake, and received an oversubscription of 119 times. The IPO proceeds accounted for 21 percent of the total GCC IPO proceeds during the period. 

Alef Education, listed on the Abu Dhabi Securities Exchange, secured the second spot with its IPO raising $515 million in proceeds.  

The company offered 1.4 billion shares, representing a 20 percent stake, which was oversubscribed 39 times.  

According to Markaz, Alef Education’s proceeds constituted 14 percent of the total GCC IPO proceeds during the period. 

Parkin Co., listed on the Dubai Financial Market, raised $429 million, making it the third-largest listing in the GCC region in the first half of this year.  

The parking facility provider offered 750 million shares, equivalent to a 25 percent stake. The IPO proceeds constituted 12 percent of the total GCC IPO proceeds during the period and were oversubscribed 165 times. 

Meanwhile, Spinneys Co., also listed on DFM, raised $375 million in proceeds. The supermarket chain offered 900 million shares, representing a 25 percent stake, and was oversubscribed 64 times.  

Markaz revealed that Spinneys Co.’s proceeds constituted 11 percent of the total GCC IPO. 

Similarly, Modern Mills Co., listed on Saudi Arabia’s main market, raised $314 million through the sale of 24.5 million shares, or a 30 percent stake, and was oversubscribed 127 times.  

Modern Mills Company's IPO constituted 9 percent of the total GCC IPO proceeds. 

GCC IPO market 

The overall GCC region experienced a decline in IPO activity in terms of value, with total proceeds amounting to $3.1 billion from 23 offerings in the first half. This represents a 32 percent decline compared to the same period of the previous year. 

In the UAE, IPO proceeds totaled $1.3 billion in the first six months of this year, marking a year-on-year decrease of 67 percent. Of this amount, DFM hosted $805 million, constituting 23 percent of the total GCC IPO funds in the first half. 

Similarly, ADX recorded $515 million in IPO capital, accounting for 14 percent of the total GCC IPO funds during the period. 

Meanwhile, Kuwait saw IPO funds totaling $147 million during the same period, accounting for 4 percent of the total GCC IPO value and listed on Boursa Kuwait. 

The report revealed that the healthcare sector accounted for nearly 22 percent of the total funds raised during the first half of this year through three offerings, totaling $788 million. 

In contrast, the technology sector raised over $515 million during the same period, constituting 14 percent of the total GCC IPO proceeds. 

Similarly, new listings from the industrial sector constituted 12 percent of the region’s total funds, followed by the consumer staples industry and the food and beverages sector at 11 percent and 9 percent, respectively. 

Additionally, the commercial and professional services industry contributed 8 percent to the region’s total IPO funds, closely followed by the insurance sector at 6 percent. 

Middle East IPOs  

Overall, IPOs in the Middle East are set for continued positive aftermarket performance this year, following significant gains in the first quarter, as reported by PwC in May. 

It also highlighted that the Saudi Stock Exchange has emerged as a dominant force in the GCC equity market. 

In the same month, Mohammed Al-Rumaih, CEO of the Saudi Exchange, noted that the introduction of ‘Market Making’ and the debut of ‘Single Stock Options’ have enhanced Tadawul's appeal among international investors. 

Earlier this month, another report released by CMA noted that 42 companies listed in Saudi Arabia’s benchmark index and parallel market benefitted from the nominal value split mechanism in 2023.  

This followed the CMA’s execution of the Companies Law and its Executive Regulations on Jan. 19, 2023, permitting listed firms to split stock par values from SR10 to various lower options. 

Under this mechanism, a company divides its existing shares into multiples to enhance trading volume and accessibility for investors, without altering its total market capitalization. 

Saudi banks lead GCC in credit quality with NPL ratio improving to 1.4%

Saudi banks lead GCC in credit quality with NPL ratio improving to 1.4%
Updated 15 July 2024

Saudi banks lead GCC in credit quality with NPL ratio improving to 1.4%

Saudi banks lead GCC in credit quality with NPL ratio improving to 1.4%

RIYADH: Saudi banks showcased a notable improvement in credit quality in the first three months of the year as the non-performing loan ratio decreased to 1.4 percent, according to data from the Saudi Central Bank. 

The bank, known as SAMA, presented figures that reflect a decline from 1.7 percent in the same period in 2023 and is credited to stronger risk profiles, underscoring the banking sector’s dedication to robust financial practices and effective risk management.

The NPL ratio measures the proportion of a bank’s gross loans that are not generating income because the borrowers have failed to make scheduled payments for a certain period, typically 90 days or more past due.

A lower NPL ratio to gross loans suggests healthier asset quality, suggesting that a smaller percentage of loans are at risk of default. As a percentage of capital, it indicates a more robust capital buffer to absorb potential losses without compromising the overall capital base.

The SAMA data also indicated that Saudi banks have improved their capacity to absorb potential losses from bad loans, as evidenced by the NPL ratio net of provision to capital decreasing from 2.6 percent to 2.2 percent during this period.

In May, Fitch Ratings observed that Saudi banks generally possess the strongest risk profiles among lenders in the key Gulf Cooperation Council markets, supporting their asset quality.

GCC banks’ primary focus on lending underscores the significant role of credit risks, which assess the likelihood of borrowers defaulting, thereby shaping their overall risk profiles.

Saudi banks experienced robust lending growth, approximately double the GCC average from 2022 to 2023, driven by increased government spending and strong non-oil gross domestic product development, the agency noted.

Nevertheless, the Kingdom maintains a healthier loan portfolio with fewer loans at risk of default, which is a result ofeffective risk management strategies, stringent lending standards, and potentially less exposure to high-risk sectors or borrowers.

Globally, Saudi Arabia’s banking system is also recognized for its high levels of capitalization under a strong regulatory framework.

It also stands out as one of the few countries fully compliant with Basel IV regulations, which mandate specific leverage ratios and require banks to maintain designated reserve capital, as reported by the agency in February of 2023.

According to the agency, factors contributing to more robust risk profiles for Saudi banks include SAMA’s reputation as the region’s strictest and most prudent banking regulator.

From 2019 to 2023, the sector cost of risk in the Kingdom averaged 0.6 percent, which is lower than the average costs observed in the UAE, Qatar, and Kuwait, Fitch noted in its February report.

Additionally, the combined ratio of Stage 2 and Stage 3 loans, which indicates potential credit impairments, stood at 7.2 percent, marking the lowest among these four GCC markets. Additionally, they benefit from a larger and more diversified economy and strong retail financing from 2021 to 2023, which reduces borrower concentration.

On average, the 20 largest exposures at Saudi and Kuwaiti banks account for about 20 percent of their loan books, compared to approximately 35 percent at UAE and Qatari banks.

Furthermore, Saudi banks extend lower levels of financing to companies owned or managed by high-net-worth individuals, including royal family members, compared to some UAE and Qatari banks.