Trading is set to begin tomorrow on steeply discounted shares of Saudi Arabia’s National Commercial Bank as Saudi Arabia’s capital market regulator will introduce rules for credit rating agencies next September, according to reports.
Matthew Martin and Sarmad Khan of Bloomberg quote Asim Bukhtiar, a vice president and head of research at Riyad Capital, as saying that although most IPOs in Saudi Arabia are sold at a discount, “and in this case it was quite a deep discount…NCB shares could up end up rising to between 80 to 85 riyals, so investors should do very well.”
NCB’s IPO is widely expected to be the second largest globally in 2014 behind China’s Alibaba, and the largest ever in the Arab world.
Bloomberg noted that previous offerings have done well on their debuts, noting that Alinma Bank, a Shariah-compliant lender based in Riyadh, “climbed 60 percent on when it started trading in June 2008. Saudi Arabian Mining Co. also soared as much as 60 percent after its IPO that year.”
NCB’s IPO comes before Saudi regulators plan to open the Saudi stock market to wider foreign investment amidst other financial sector reforms.
Reuters reports today that the CMA will aim to introduce new credit ratings rules in September of 2015:
“To apply for a credit rating license, companies will be required to have a physical presence in the kingdom with a minimum capital of 2 million riyals ($533,000; Dh1.95 million) or working capital that is enough for three months, whichever is higher.”
