Kuwait, classified as an emerging market by index provider FTSE Russell in September, plans to sell a stake in its stock exchange as early as this year.
The Capital Markets Authority is conducting studies for the initial public offering through the end of April, Vice Chairman Mishaal Al-Usaimi told Bloomberg TV, “From that we will have a very clear timeline taking us to the IPO, but we are hopeful that we will complete that by the end of the year.”The purpose of the sale is to reconfigure and restructure the Kuwait stock exchange, following a rigorous infrastructure upgrade which is in the process of being implemented.
Kuwait’s bourse is competing with Saudi Arabia’s to become the second in the six-nation Gulf Cooperation Council after the Dubai Financial Market PJSC to raise cash through an IPO and expects an influx of hundreds of millions of dollars from investors after the FTSE upgrade. Al-Usaimi said interest in Kuwaiti stocks remains “buoyant,” although he acknowledged that liquidity 'remains an issue', said Bloomberg.
The nation’s benchmark index has 156 members, at least 40 of which have been unchanged by the close of trading since 2006, when Bloomberg began tracking the data. The gauge last year rose 11 per cent, the most since 2013, and posted an annual profit of 3.5 million dinars ($11.7 million). That “comes on the back of several years of losses,” Al-Usaimi said.
According to the CMA last month, the share sale will consist of an offering as much as 50 per cent to the public and up to 24 per cent to state entities, and a consortium led by Tri International Consulting Group to advise on selling as much as 44 per cent of Boursa Kuwait to a foreign exchange operator has been hired.
Two or three companies may sell shares through IPOs that could raise about KWD 80 million this year, according to Boursa Kuwait chief executive Khaled AbdulRazzaq AlKhaled during a conference in Dubai yesterday. He added that the bourse also plans to start the second phase of reforms on 1 April, which will include separating equities into three categories based on market capitalisation and trading volume.