Saudi Arabia's Tadawul converts into a holding company ahead of planned IPO this year

Group entity will oversee subsidiaries running the exchange, clearing, deposits and a new technology servicesarm

FILE PHOTO: A Saudi woman walks at the Saudi stock market (Tadawul), in Riyadh, Saudi Arabia March 9, 2020.  REUTERS/Ahmed Yosri/File Photo

Saudi Arabia’s Tadawul stock exchange, the biggest Arab bourse, is changing its corporate structure and converting into a holding company ahead of its initial public offering later this year, its group chief executive said.

The company will announce the timing and percentage of shares it plans to sell at a later date and has yet to decide on whether it will open the planned float to foreign investors, Khalid Al Hussan told an online media briefing on Wednesday.

“The structure of the IPO, or to present this company [Tadawul] on [a] local level or to add any external segment [of investors from] from outside the kingdom, this is still to be discussed with financial consultants,” Mr Al Hussan said. “We will announce all these details.”

Saudi Arabia’s sovereign investment arm, the Public Investment Fund, is the sole shareholder of Saudi Tadawul Group.

The group oversees four subsidiaries: the Saudi Exchange, a dedicated arm running the kingdom's equity market previously known as the Saudi Stock Exchange Company; the Securities Clearing Centre Company (known as Muqassa); the Securities Depository Centre Company (Edaa); and a new subsidiary focused on applied technology services known as Wamid.

Sarah Al-Suhaimi will lead the new Tadawul Group as chairperson, while Mr Al-Hussan is the group's chief executive. Mohammed Al Rumaih will head the Saudi Exchange business and Mohammed Al Nory has been appointed as chief executive of Wamid.

"The transformation into the new structure under Saudi Tadawul Group will support the continued growth of the Saudi capital market and reinforce its position as … [an] advanced capital market," Ms Al Suhaimi, said.

“Comprehensive capital market reforms are not only prudent but essential to ensuring higher economic growth … and to align with the strategy of the Public Investment Fund.”

Tadawul, which is among the top 10 global stock markets with a market capitalisation of $2.8 trillion, will become only the third publicly-traded regional stock exchange after the Dubai Financial Market and Boursa Kuwait. In March, Reuters reported that the bourse, which counts the world's most highly-valued listed company Saudi Aramco among its ranks, has invited banks to pitch for its IPO.

Tadawul has 1.2 billion Saudi riyals ($320 million) of capital, divided into 120 million shares, according to its website.