Kuwait seeks advisers for stock exchange stake sale

Boursa Kuwait is region’s best performer of 2017

Kuwaiti banks are expected to see healthy income levels following the central bank's relaxation of precautionary provision requirements. AFP

Kuwait’s market regulator is seeking advisers to help it sell a stake in the oil-rich state’s stock exchange, the region’s best performing market this year, joining a growing number of Arabian Gulf countries that are looking to privatise their equity markets.

The country's Capital Markets Authority (CMA) on Sunday issued a tender for the advisory services mandate for the sale of a stake in the exchange, known as Boura Kuwait. Financial advisory firms have until January 7 to submit bids, according to an announcement on the regulator's website. The CMA did not specify how much of the share capital of the Boursa Kuwait could come up for sale, or when the transaction is expected to take place.

Governments in the Arabian Gulf region are looking to part-privatise state-owned assets to raise capital in the wake of lower oil revenues. Stock exchanges are among the assets lined up for public floats.

The announcement of the Boursa Kuwait privatisation follows plans by Saudi Arabia to sell a stake in Tadawul, the biggest bourse by market capitalisation in the GCC, to become the region's second publicly traded equities platform after Dubai Financial Market. Riyadh is on track to part-privatise the exchange in 2018.

Oman's market regulator meanwhile also plans to privatise the country's Muscat Securities Market (MSM) via a share sale, the bourse's director general Ahmed Saleh Al Marhoon told Times of Oman. Oman will create a holding company under the State General Reserve Fund (SGRF) that will assume ownership of the bourse, he said.

“It was an issue discussed some time back, and the government took a decision to proceed with it, since the time is appropriate to form a company now," Al Marhoon told the newspaper. "To start with, SGRF will be the owner of MSM. And when the market’s trading volume improves and the climate is encouraging, the company shares will be listed.”

He did not specify  a timeline or how much of a stake will be sold.

Abdullah bin Salim Al Salmi, executive president of the Oman’s CMA, had earlier said that the listing of the shares may happen within three to five years, according to the news report.

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Initial public offerings across the region have picked up paces after a lull of three years on the back of a fall in the crude prices which dented investor sentiment. Emaar Development, a unit of Emaar Properties, and Adnoc Distribution, retail and distribution arm of the Abu Dhabi National Oil Company (Adnoc), have already floated shares this year on Dubai and Abu Dhabi stock markets respectively.

Saudi Aramco, the world’s biggest oil exporter, is on track for a 2018 share sale, possibly the biggest ever globally. Emriates Global Aluminum in the UAE is also lined up for an IPO during the coming year.

Boursa Kuwait, one of the region’s oldest stock exchange, is the top performer among the GCC stock markets this year, rising 12 per cent since the beginning of this year.

Index provider FTSE Russell included Kuwait in its emerging market index in September, a move that is expected to bring $822 million of inflows to the bourse. FTSE picked Kuwait ahead of Saudi Arabia, which is also vying for an upgrade to emerging market status from both FTSE and fellow index provider MSCI. Success would result in billions of dollars of passive inflows into Saudi equities.