Tadawul sees most listings in MENA region, says Al-Athel

The Saudi Stock Exchange (Tadawul) has seen 15 new listings year-to-date, four times higher than the last five years’ average and the highest level in the MENA region, Nayef Al-Athel, Head of Listing at Saudi Stock Exchange (Tadawul) told Argaam.

These offerings were 631 percent oversubscribed on average, mirroring the investors’ strong appetite.

Al-Athel said the success or failure of an IPO depends on certain criteria like the company’s valuation, its business plan, the kind of industry in addition to the company’s ability to lure institutional investors.

Q: Can you tell us about the initiatives aimed at increasing Tadawul’s new listings?

A: Tadawul is the key market in the MENA region in terms of turnover and market share. A number of initiatives was launched to implement the best global criteria in line with Saudi Vision 2030, including setting up a new market platform to lure the Real Estate Investment Traded Funds (REITs); launching the new parallel market – NOMU which stipulates less listing requirements for qualified investors; and introducing a new listing authority earlier in 2017. In addition, time for reviewing the listing application was cut from 6 months- one year to two-three months.

Q: How will these initiatives impact the Saudi market in 2017?

A: It is a positive impact, as Tadawul saw 15 new listings in 2017, four times higher than the last five years’ average, and the highest in the MENA region.

Q: What do you think of the new listings?

A: The new listings were completed successfully. They raised up to SAR 18 billion, with a 631 percent coverage ratio on average, implying the investors’ strong appetite.

Q: What is the reason behind cancelling some recent offerings?

A: There are certain criteria for successful share floatation, the company’s valuation, its business plan, the kind of industry it is in and the company’s ability to lure institutional investors through road shows.

Q: What are the key differences between the main market (Tadawul) and the parallel market (Nomu)?

A: The key difference is the listing requirements, as they are more flexible and with lower cost in the secondary market. Also, Nomu has less liquidity compared to Tadawul.

Q: Are there any amendments pertaining to the Nomu investment guidelines?

A: The Capital Market Authority (CMA) board of directors adopted amended guidelines and new mechanism for foreign investment in Nomu as part of efforts to develop the equity market and attract more foreign investments in line with the Saudi Vision 2030. Under the new regulations, non-resident foreign investors are allowed complete access to the secondary market, starting from January 1, 2018.