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Jeddah - Yasmine El Tohamy - RIYADH: Proceeds from initial public offerings in Saudi Arabia should be reinvested in growth opportunities, according to the CEO of ANB Capital.
Speaking during a panel discussion on the first day of the Saudi Capital Market Forum, Khalid Al-Ghamdi explained how this would help propel the national economy and aid the Kingdom in achieving its aspirations.
Al-Ghamdi said: “Ideally, proceeds should be used for expanding business lines, creating jobs, and developing infrastructure.”
He further noted that they can also be utilized to drive growth, generate tax revenues, and maximize shareholder value.
During the forum titled “Unleashing the Saudi Capital Markets Potential,” the CEO of the Riyadh-based investment bank also shed light on the significance of the National Transformation Program.
“Our companies raised a total of $21 billion between 2016 to 2023, excluding of course Aramco, and this is equivalent to what was raised in the eight years prior to NTP,” he stressed.
“What’s really interesting is that the average size of IPOs post-NTP has increased to $450 million from $367 million, indicating an enhancement in the quality and profitability of the companies currently coming to market,” Al-Ghamdi highlighted.
“Between 2008 and 2015, 53 percent of the funds raised through IPOs were reinvested back into the companies, while 47 percent went back to the selling shareholders,” he revealed.
Al-Ghamdi continued: “Conversely, between 2016 and 2023, only 15 percent of the funds raised were reinvested back into companies and a very significant 85 percent were pocketed by selling shareholders.”
Also speaking during the same panel, the CEO of the Saudi Exchange, Mohamed Al-Rumaih, reflected on the importance of the Saudi capital market in fueling economic growth.
Al-Rumaih asserted that the Saudi Exchange witnessed more than 120 listings in the past three years across all markets and facilitated financing exceeding $100 billion.
He further highlighted that the capital market plays a crucial role in the economy through foreign investments. The number of qualified foreign investors in the Kingdom surged by over 70 times, growing from 50 in 2017 to more than 3,700 by the end of last year.
Organized by Saudi Tadawul Group, the two-day event, held under the theme “Powering Growth,” aims to serve as a nexus for transformative dialogue and innovation. It seeks to foster the convergence of emerging markets with established financial frameworks.
Emphasizing the pivotal role of such events, Mahmoud Khairy, an economist and policy adviser, told Arab News earlier this week that “the forum facilitates essential dialogue among key stakeholders, fostering collaboration and innovation within the financial sector.”
Khairy said the event also aligns with Vision 2030’s goals by promoting transparency, and good governance, and attracting domestic and international investments.
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