riyadh: Investment bank Saudi Fransi Capital has three big initial public offers of shares in the pipeline as the Saudi Arabian equity market booms and firms become keener to list, the company’s chief executive said.
The kingdom’s $550bn stock market, by far the largest in the Arab world, saw just five IPOs in 2013 worth a total of around $506m, down in both volume and value from the previous year.
But volume and value are both set to rise this year as the securities regulator encourages listings of companies which it believes contribute to economic growth.
Although the main equity index has pulled back in the last two weeks because of sliding oil prices and concern about global economic growth, it is still up 16 percent year-to-date and up 45 percent since the end of 2012.
In a reform designed to increase the long-term efficiency of the Saudi economy and stimulate private sector growth, the Capital Market Authority announced in July that it would open the stock market to direct foreign investment in the first half of next year.
“We have an excellent deals pipeline...We think we will see one IPO every quarter from Saudi Fransi Capital for the coming five quarters,” Yasir Al Rumayyan said in an interview at the Reuters Middle East Investment Summit.
Each of the three big IPOs currently in Saudi Fransi’s pipeline is larger than SR1bn ($267m), Rumayyan said: Sulaiman Al Habib Medical Group, one of the largest private providers of healthcare in the region; water and power project developer ACWA Power; and Petromin, a lubricants producer.
“I have a bigger list than this one...We have another IPO in the steel sector, and one in building materials,” said Rumayyan, whose company is an arm of Saudi Arabia’s fourth-largest listed lender, Banque Saudi Fransi. Saudi Arabia’s National Commercial Bank is currently conducting a $6bn IPO, the largest ever launched in the Arab world.
The deepening of the Saudi stock market through IPOs and its opening to foreign investors are expected to support growth for asset managers in the kingdom.
“Our assets under management (AUM) is about 10 billion riyals, but this number is growing tremendously, as it was less than 5 billion in 2010,” Rumayyan said.
“We want to grow like 15 to 25 percent on an annual basis, and we think it is doable because we have been doing it in the past three or four years.”
Rumayyan said his company would open an office in Dubai to cater to international investors in the brokerage and asset management sectors. In the past, Saudi banks have rarely opened overseas offices, preferring to focus on their domestic market.
Reuters
