Saudi Tadawul Group Holding Company debuted on the Saudi exchange
in November, marking a new era in the country’s financial markets.
Trading under the symbol 1111, the Saudi Tadawul Group (STG) floated
36 million shares, representing 30% of its issued share capital.
Institutional investors were allocated 70% of the shares, while the rest
were earmarked for individual investors.
The IPO saw significant demand from institutional and retail investors,
and was 121x and 4.4x oversubscribed, generating SAR 458 billion and
SAR 5.02 billion, respectively. The offering shares were priced at SAR
105 per share, at the top of the company’s initial price range, implying a
market capitalisation of SAR 12.6 billion at the time of listing.
The listing comes after the company restructured earlier in the year with
the launch of the holding company, the Saudi Tadawul Group – a central
pillar of the Financial Sector Development Program, under the Vision
2030 initiative.
“The Saudi Tadawul Group is the new capital of ambitions,” said Sarah Al-Suhaimi, Saudi Tadawul Group chair.
The STG will operate four subsidiaries: the Saudi Exchange, a dedicated
stock exchange business (previously known as the Saudi Stock
Exchange Company - Tadawul), the Securities Clearing Center Company
(Muqassa), the Securities Depository Center Company (Edaa), and
Wamid – a new innovative applied technology services business.
"This is a significant achievement in our journey to transform Saudi Arabia's economy. Comprehensive capital market reforms are not only prudent but essential to ensuring higher economic growth, to achieving the nationwide goal of the successful delivery of Saudi's Vision 2030, and to align with the strategy of the Public Investment Fund (PIF),” Al-Suhaimi said.
IPO BOOM
The landmark IPO is the latest in a slew of new listings on the Tadawul
this year. According to STG data, 12 companies debuted on the Saudi exchange in 2021, including the International Company for Water and
Power Projects (ACWA Power), Arabian Contracting Services Co., and
Arabian Internet and Communications Services Co.
Three other company listings are in the pipeline, according to Tadawul.
In October, the Saudi exchange was included in FTSE Russel’s Emerging Markets Government Bond Index (EMGBI) effective April 2022.
“The inclusion of Saudi Arabia in the FTSE EMGBI marks the first time
Saudi riyal-denominated fixed income instruments are included in a
global index and is a significant milestone in the development of the
broader Saudi capital market,” the company said. “The FTSE EMGBI
measures the performance of local currency government bonds from
over 16 countries, providing a broad benchmark for global portfolio
managers to enable performance comparisons across sovereign debt
markets.”
Like most global equity markets, the Tadawul index has also enjoyed
strong growth in 2021. The market was up 23.8% by the end of
November, which included 10 consecutive monthly gains.
The market briefly surged past SAR 10 trillion this year, before closing
at SAR 9.6 trillion by the end of December.
The Saudi market, which was one of two GCC indices that were in
positive territory in 2020, continued its rally this year on the back of
several initiatives related to Vision 2030.
Investors were also buoyed by high oil prices, which have surged 47.7%
this year to USD 74.20 per barrel, as the global economy rebounds.
As many as 17 of Tadawul’s 21 sectors are in positive territory for the
year, highlighting the broad recovery. Not surprisingly, software and
services – which has thrived globally during the pandemic – emerged as
the best performing sector with gains of 96.1% until November.
Media rose 87.2%, followed by banks (up 50.5%), and diversified
financials (+40.6%).
REGIONAL OUTLOOK
The broader S&P GCC index has also galloped ahead, rising 29.84% year
to date, as most Gulf countries leveraged their strong fiscal standing to
support the economy, and took measures to stem the tide of COVID-19.
A number of countries embarked on stimulus programmes, while
corporations took the opportunity to cut costs and streamline their
operations to prepare for the post-COVID era, leading to greater
business activity and higher earnings potential for listed companies.
The Abu Dhabi General Index has emerged as the best performing
market year to date, with gains of 69.4%. Dubai index (up 23.3%),
Kuwait’s Premier Market Index (up 21.4), and Bahrain All Share Index (up
16.1%) also saw gains. Oman’s MSM 30 Index has grown 9.3% year to
date, with Qatar’s QE20 Index posting the slowest growth among GCC
markets, with 9.1%.