Saudi support fund to provide economic stimulus for Tadawul-listed companies

Listed companies will see their financing limits increased and Tadawul said it was confident the move would encourage more companies to list on the exchange

  
A man walks at the Saudi Stock Exchange (Tadawul) following the debut of Saudi Aramco's initial public offering (IPO) on the Riyadh's stock market, in Riyadh, Saudi Arabia, December 11, 2019. Image used for illustrative purpose.

A man walks at the Saudi Stock Exchange (Tadawul) following the debut of Saudi Aramco's initial public offering (IPO) on the Riyadh's stock market, in Riyadh, Saudi Arabia, December 11, 2019. Image used for illustrative purpose.

REUTERS/Ahmed Yosri
 

RIYADH: Saudi Arabia’s Projects Support Fund Initiative has signed an agreement with Tadawul, the Saudi Stock Exchange, to provide economic stimulus for listed companies.

The initiative targets private sector companies in the healthcare, education and large real estate development sectors, in a bid to help gross domestic product growth, create employment and support local companies.

The agreement was finalised on Sunday and was signed by Fahad Al-Saif, CEO of the National Debt Management Center, and Tadawul CEO Khalid Al-Hussan.

“The agreement targets companies listed in the Saudi Stock Exchange, indicating that the stimulus is to be provided through long-term loans to the companies,” Tadawul said in a press statement.

Listed companies will see their financing limits increased and Tadawul said it was confident the move would encourage more companies to list on the exchange.

“This comes within the framework of initiatives to incentivize and encourage private sector companies to offer and list their shares on the stock exchange. This is one of the initiatives of the Financial Sector Development Program, which targets the development of the economy and the diversification of revenue sources, through the deepening of the financial sector and the development of the Saudi Stock Exchange to achieve Saudi Vision 2030 by becoming an advanced stock exchange.”

The Projects Support Fund Initiative was established as part of the government’s stimulus initiatives with an initial capital of SR10 billion ($2.67 billion).

It was reported earlier this month that Saudi Arabia is set to lead the regional initial public offering (IPO) market this year, with authorities believed to be viewing over 15 potential listing applications.

According to a report from the Kuwait-based KAMCO Investment Company, the Kingdom “continued to provide leadership for primary markets in 2020” as four out of the seven IPOs in the region were on Tadawul.

The Kingdom also dominated in terms of IPO proceeds generated, accounting for 78 percent — or $1.45 billion — of issuance.

In December Tadawul said it planned to start laying the groundwork for its own IPO, with the launch expected after 2021.

Al-Hussan told a Bloomberg webinar that 2020 had been “an exceptional year” but “the market reacted proactively” to the impact of the pandemic.

Ammar Al-Khudairy, chairman of Samba Financial Group, echoed his optimism. “A nice number (a dozen or so) of IPOs are coming up in 2021,” he said at the same webinar.

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