Emerging Exchange to Privatize

Terry Flanagan

The government of Kuwait will look to spin off its holding of its national stock exchange as part of recently enacted regulation.

The Kuwait Stock Exchange will look to be the second publicly listed exchange in the Gulf region after taking the first steps to privatize. The move is part of a new law passed about two years ago, under which half of the Kuwait Stock Exchange must be floated in an initial public offering for Kuwaiti citizens, with the rest to be held by companies listed on the venue. The exchange is currently an entity of the Kuwait government.

“This will make Kuwait one of the first countries in the region to privatize its exchange and we are confident that the privatization will be of great benefit to the Kuwaiti economy, investors and the listed companies,” said Abdullah Al Gabandi, the head of the exchange privatization committee at the Capital Markets Authority via email.

The exchange has tapped HSBC Bank Middle East to help arrange the privatization, which will include the planned flotation. The valuation process has recently started, although no further timeline is available.

Broker-dealers in the region, including Saleem Khokhar, the head of equities at the National Bank of Abu Dhabi, note that the move would help to “raise the standards of disclosure and investor relations among domestic companies.”

Fifty Kuwaiti companies were suspended from trading last year after they failed to report Q3 results on time. Twenty-two of the listed companies have already been suspended for not declaring results from previous quarters.

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