The chief executive of Kuwait's stock exchange has said that it is expecting "another five-to-six" initial public offerings to emerge from the country's public-private partnership programme within the next four years, following on from the forthcoming listing of the Shamal Azzour Al-Oula independent power and water plant.
Speaking to Zawya on the sidelines of investment bank EFG Hermes' One on One investor conference in Dubai on Monday, Boursa Kuwait CEO Khaled AbdulRazzaq Al Khaled, said: “The role of PPP projects is big. This (Shamal Azzour Al-Oula) is one and we're expecting another five to six companies within the next three to four years to be introduced (to the market).
“We are working closely with NBK Capital, which is the bank responsible for the IPO. Hopefully, it will be one of the first companies to IPO within the new segmentation.”
Kuwait’s PPP law, which was revised in 2015, requires consortia set up to deliver power and other infrastructure projects to eventually float the vehicle created to own the project so that local investors have the opportunity to buy shares in it.
Al Khaled, who had earlier told the conference that Boursa Kuwait is expecting to have completed its own IPO by the first quarter of next year, also explained that, as part of an ongoing overhaul of its operations ahead of its listing, it is creating three new market segments which will be introduced next month - a 'premier' market, a main market and an 'auction market' where stocks with low levels of liquidity will be traded during two, 15-minute auction periods per day.
Al Khaled said that 2018 would be a "year of implementation" for Boursa Kuwait, following the deal signed last month by the country's Capital Markets Authority with Tri International Consulting Group and Oliver Wyman to advise on the sale of a stake of between 26 and 44 percent of the exchange.
Following the listing, he said the implementation of a range of other services will follow, including the creation of a central counterparty clearing platform (CCP ) – a clearing house set up to settle market trades between buyers and sellers of shares - and the introduction of new derivatives products.
“Hopefully by next year, we are going to go into the CCP process and by 2020 maximum we are going to introduce the derivatives,” Al Khaled said.
Relaxing the rules
He also said that rules on the process of seeking a listing had been relaxed, including rules governing dual listings, which will allow it to target firms from across the region to list on its exchange.
"We are a good marketplace with very deep pockets for growth. So if you want to raise capital it's the best place to get listed," he argued.
Kuwait's stock market is one of the region's oldest, but it has suffered from a string of delistings in recent years.
Speaking during a panel debate at the conference, the chief executive of Kuwait's Capital Markets Authority, Mishal Al Usaimi, said that he hoped that the reform programme which has been taking place over the past few years would boost the market's appeal not only to international investors but also to important local organisations - many of whom were "key members" of the exchange that later delisted.
"Their departure from the market - specifically over the last 15 years - I think was mainly because of the lack of transparency,” he said, before adding that the formation of a Capital Markets Authority and the development of a more robust regulatory framework had helped.
"With the introduction of the reforms that we are having, what we want to see is bringing back some of the institution-like local investors," said Al Usaimi.
(Reporting by Michael Fahy; Editing by Shane McGinley)
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