Boursa Kuwait expects two IPOs in next 12 months, acting CEO says

Exclusive: The country's stock exchange sees its own IPO by year-end

Kuwait's stock exchange expects upto four IPOs in the next 12 months. EPA

Boursa Kuwait, one of the oldest and largest stock exchanges in the Arab world, expects as many as two initial public offerings from the services and finance sectors and two real estate investment trusts within the next 12 months, its acting chief executive said.

The exchange seeks to attract more companies from the petrochemicals sector, Mohamed Al Osaimi, acting chief executive of the exchange, said in an interview with The National on Thursday.

"We’d like to have a portfolio that represents the country’s economy," Mr Al Osaimi said. "Currently there's not that much presence from petrochemical companies, there are two listed in the premier market and we would like to see more."

The world's largest index compiler MSCI will upgrade Kuwait to its main emerging markets index by 2020, a reclassification that could attract $2.8 billion (Dh10.2bn) of inflows from passive funds to its equities market. Kuwait will be the fourth country from the region after the UAE, Qatar and Saudi Arabia to be reclassified as an emerging market.

The inclusion will give nine Kuwaiti equities, which will become the constituents of the emerging market gauge, a pro forma weight of approximately 0.5 per cent.

Mr Al Osaimi said he expects the list of nine companies to increase to the "plus teens" with time. "We might see a gradual increase by the time of inclusion and after that in the periodic review," he said.

Boursa Kuwait, which has plans for its own IPO, is working with the market regulator to finalise the 50 per cent sale by the end of 2019, Mr Al Osaimi said.

"We are working closely with the Capital Markets Authority," he said. "We hope by the end of this year to have the IPO for Kuwaiti nationals for the 50 per cent IPO of Boursa Kuwait."

The date for its listing on the exchange has yet to be determined, he said.

Kuwait, which is the best-performing bourse in the Arabian Gulf this year, is competing with regional exchanges to stay at the top.

"We try to maintain it definitely and get that title again," Mr Al Osaimi said. "Each of our regional exchanges are trying to compete for the extra bit of funds from international investors and convince local investors to pour in more."

Kuwait's $98bn stock market, which is similar in size to those of New Zealand and Ireland, is currently the largest member of the MSCI’s main frontier gauge.

Mr Al Osaimi said the bourse is "cautiously optimistic" about increasing its market capital to levels exceeding Kuwait's $120bn gross domestic product to reach above three to four per cent growth.

"We believe that a gradual increase rather than a spike is much better in having good momentum," he said. "EMs have so much volatility, we want to participate by having less volatility and more steady growth."

To reach that benchmark of Kuwait's GDP levels, the bourse is seeking to attract more capital inflows by "getting more issuers into the market, more transparency, more products, upgrading back office systems and reducing bottlenecks--all of that enhances liquidity", he said.