Kuwait’s Capital Markets Authority (CMA)’s initial public offering of its 50 per cent stake in Boursa Kuwait Securities Company generated strong investor interest, with 83,000 Kuwaitis signing up to subscribe for shares. The offer for shares in the operator of the country's stockmarket was oversubscribed by more than 8.5 times.
Boursa Kuwait's shares were offered to Kuwaiti nationals between October 1 and December 1, with the subscription closing at 1 pm on Sunday. Subscribers will be notified how shares will be allocated by December 8.
“As a result of the successful closure of the offering, Boursa Kuwait has become the only stock exchange operator in the Middle East that is not owned by the state,” said the chairman of CMA’s board of commissioners and managing director Ahmad Al-Melhem.
He said the development “marks as a landmark transaction in the history of Kuwait’s capital markets, and an important step towards achieving the ambitious national development goals set out in Kuwait’s Vision 2035.”
The public offering of Boursa Kuwait, led and managed by Kamco Investment Company, marks the second and final phase of the privatisation process of Boursa Kuwait.
The first phase took place in February 2019, when a strategic consortium consisting of local investors and an international Securities Exchange operator acquired a 44 per cent stake in the company.
The consortium comprised of Hellenic Exchanges-Athens Stock Exchange, National Investments Company, First Investment Company, and Arzan Financial Group.
The second phase, the nationwide IPO has been implemented in the last quarter of 2019 with the distribution of the CMA’s 50 per cent stake to Kuwaiti citizens.
After the allocation of the remaining 50 per cent of Boursa Kuwait's shares, Boursa Kuwait will be 94 per cent owned by citizens and the private sector, while the Kuwaiti government, through the Public Institution for Social Security, will have the remaining 6 per cent.
Boursa Kuwait replaced the Kuwait Stock Exchange in 2014. A market development program led by the CMA in collaboration with Boursa Kuwait and the Kuwait Clearing Company introduced reforms to increase competitiveness and liquidity, reinforce transparency and management, elevate investor confidence, and attract international, regional, and domestic investments.
One result of the reforms has been an upgrade of the market by index providers. FTSE Russell granted Kuwait emerging market status in September 2017, S&P Dow Jones Global Benchmark Indices upgraded it in December 2018, and most recently MSCI said it was likely to upgrade Kuwait to emerging market status next year, subject to certain conditions being met.
The upgrade is likely to lead to foreign inflows in large Kuwaiti stocks of between $2.6bn to $3bn from funds that passively track the MSCI index, Boursa Kuwait has said.
Shares also trade in the Dubai Financial Market on its exchange, but only 20 per cent are on offer to investors with the remainder held by Borse Dubai, a company owned by sovereign fund the Investment Corporation of Dubai.