Sico acquires majority stake in Bank Muscat's investment banking arm in Saudi Arabia

The deal gives Sico a 72.2% stake in Muscat Capital and allows it to expand its presence in the kingdom

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An aerial view shows the skyline of Riyadh, Saudi Arabia, 10 January 2020 (issued 21 January 2020).
Riyadh architecture, Saudi Arabia - 10 Jan 2020
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Sico, a Bahrain-based financial services firm, acquired a majority stake in Muscat Capital, the Saudi Arabia-based investment banking unit of Bank Muscat.

The 5.5 million Bahraini dinar ($14.6m) deal was carried out through a share swap, with 38.56 million Sico treasury shares swapped for 4.36 million shares out of Muscat Capital’s 6 million outstanding shares, Sico said in a statement on Monday.

The Bahrain-based company now owns 72.2 per cent of Muscat Capital while Bank Muscat, one of the biggest financial institutions in Oman, controls a 9 per cent stake in Sico, which offers investment banking, brokerage and market-making services to its clients in the region.

Regional and international banks and financial services firms are increasingly looking to expand their presence in Saudi Arabia to capitalise on debt and equity capital markets deals in the biggest Arab economy.

Muscat Capital, which is licensed by Saudi Arabia's Capital Market Authority, is a full-service capital market institution, that has operated in the kingdom since 2009.

“This acquisition also provides Sico with a direct presence in the region’s largest capital market, Saudi Arabia, which is a major milestone in cementing Sico’s position as a leading regional investment bank,” Abdulla bin Khalifa, Sico’s chairman, said.

“We look forward to our new partnership with Bank Muscat … as we work together to uncover new growth opportunities in the regional markets.”

Saudi Arabia, Opec’s biggest oil exporter, is radically transforming its economy to reduce its reliance on hydrocarbon revenue. The kingdom is looking to boost foreign direct investment into its capital markets as it attempts to develop its industrial, mineral and mining, petrochemical and defence sectors among others.

Partial privatisations of state-owned entities and public-private partnerships, especially in the country's health and education sectors, are also high up on Riyadh’s agenda under its Vision 2030 programme, which opens up many new deal opportunities for investment banks.