Arab News,
Thu, Nov 07, 2024 | Jumada al-Awwal 5, 1446
Saudi Tadawul Group eyes M&As to strengthen capital markets: Bloomberg
Saudi Arabia:
Saudi stock exchange operator Tadawul Group is
ramping up plans for mergers and acquisitions to expand the Kingdom’s capital
markets amidst a wave of local listings, a senior executive said.
In an interview with Bloomberg in London, Chief
Strategy Officer at Saudi Tadawul Group Lee Hodgkinson highlighted that the firm
is targeting “digestible” and “strategically relevant acquisitions,” though he
did not elaborate on specific targets.
“Mergers and acquisitions will be more integral to
our future strategy than in the past,” Hodgkinson said.
The Saudi bourse has seen an influx of companies
listing in recent years. This aligns with the Kingdom’s Vision 2030 initiative
led by Crown Prince Mohammed bin Salman, which aims to deepen capital markets
and reduce reliance on oil.
This year alone, stock sales on Tadawul have
raised $15.6 billion, including a significant offering from energy giant Saudi
Aramco, Bloomberg reported.
While Hodgkinson did not dismiss potential
acquisitions of other stock exchanges down the line, he emphasized that
Tadawul’s immediate focus is on diversifying its revenue streams.
Earlier this year, the firm acquired a stake in
the Dubai Mercantile Exchange’s parent company for $28.5 million, marking a
strategic move into the commodities market.
Looking ahead, Tadawul is exploring various
post-trade services, including stock lending and collateral management,
alongside developing data services like market indices.
According to Hodgkinson, the team will “exercise a
great deal of discipline” on value and possible synergies while evaluating
purchase possibilities. He added that M&A activity is intended to support the
group’s organic growth strategy.
In August, Bloomberg reported that the Saudi
Tadawul Group is intensifying its focus on attracting Asian investors to boost
liquidity and trading activity in the region’s largest market.
This push comes as foreign ownership in Saudi
capital markets has grown significantly, reaching SR401 billion by the end of
2023, a record high.
Net foreign investments rose by 7.7 percent from
the previous year to SR198 billion ($52.77 billion), highlighting the success of
the Qualified Foreign Investor program, first introduced in 2015 to open up the
Saudi market to global backers.
According to Bloomberg, the Tadawul Group has
identified Asia as a key area of focus, aiming to strengthen ties with major
Asian markets to diversify the Kingdom’s investment sources.
In the interview, Hodgkinson highlighted that the
group sees immense investment potential from markets like China and India.
Tadawul also plans to expand beyond equities into
debt markets, commodities, and advanced post-trading services to position itself
as a competitive international market player.
Increased mergers, acquisitions, and
partnerships are anticipated as the company pursues these goals.