Saudi Arabia’s stock exchange, the largest in the Middle East, announced a reorganisation of its corporate structure in preparation for a highly anticipated initial public offering this year.
The newly created Saudi Tadawul Group will have four subsidiaries, comprising the exchange, a clearing centre, a depository company and a technology-services business.
The changes create the “necessary platform” to strengthen the group’s infrastructure before the IPO this year, company officials said in a virtual event Wednesday.
“Our announcement today brings a new challenge and greater ambition to open up new horizons for the future of an advanced financial market in concurrence with the kingdom’s Vision 2030 and in accordance with the strategy of the Public Investment Fund,” said Khaled Al Hussan, CEO of Tadawul.
Saudi Arabia has been the hottest market for IPOs in the Middle East over the past two years, with new offerings oversubscribed, mostly by local retail and institutional investors. In 2019, the bourse hosted the $29 billion offering of the world’s biggest oil producer, Saudi Aramco, with shares being sold mostly to Saudi investors seeking guaranteed dividends.
Once completed, the reorganisation would make it the third publicly listed stock exchange in the Gulf after the Dubai Financial Market and Boursa Kuwait. The exchange hired HSBC Holdings Plc in 2016 to manage its flotation. In March, Reuters reported that bourse has invited banks to pitch for its IPO.
Sarah Al-Suhaimi will chair the new group, while Khalid Abdullah Al-Hussan will be the group’s chief executive officer. Mohammed Al-Rumaih, who has been serving as the chief of markets at the bourse, was elected as the CEO for the Saudi Exchange, previously known as Saudi Stock Exchange Company Tadawul.
“This announcement confirms our ambition and vision to become a leading financial market among the emerging markets. There is no doubt that this is an important step in our journey through which we seek to provide an investment environment that support our economic development plans,” said Al-Suhaimi.
The Tadawul All Share Index, composed by 198 members, is up 15 percent this year, versus a 4 percent increase for the MSCI Emerging Markets Index.
Sarah Al-Suhaimi is the first woman to chair Tadawul, the Saudi stock exchange
• The Tadawul is owned by Saudi Arabia’s Public Investment Fund, the sovereign wealth fund. It has a capital of 1.2 billion riyals ($320 million), divided into 120 million shares, according to its website.
• The Saudi exchange posted a net income of 153 million riyals in 2019, when earnings before interest, taxes, depreciation and amortization reached 205 million riyals.
• The total value of shares traded in Riyadh last year reached $557 billion, a jump of 137 percent versus the previous year, according to the exchange’s annual report. That compares with about $18 billion in the Dubai Financial Market PJSC, which posted a 24 percent increase in total traded value last year.
• Compared with Saudi Arabia’s $2.5 trillion size, the United Arab Emirates exchanges have a combined market capitalization of $329 billion and Kuwait has $103 billion.
*With Bloomberg
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