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Abu Dhabi, UAETuesday 19 June 2018

Kuwait market regulator appoints advisers for bourse privatisation 

The country joins a list of GCC sovereigns vying to privatise their equity markets 

Kuwait’s market regulator has appointed a consortium of advisers to help it sell a stake in the oil-rich state’s stock exchange.  Stephanie McGehee / Reuters
Kuwait’s market regulator has appointed a consortium of advisers to help it sell a stake in the oil-rich state’s stock exchange. Stephanie McGehee / Reuters

Kuwait’s market regulator has appointed a consortium of advisers to help it sell a stake in the oil-rich state’s stock exchange, joining a growing list of Arabian Gulf countries looking to privatise their equity markets..

On Tuesday, the Capital Markets Authority (CMA) said it has hired Tri International Consulting Group (TICG) to advise on selling a minimum of 26 per cent and a maximum of 44 per cent of Boursa Kuwait to an International exchange operator. Another option may see the sale of a stake to a joint venture between Kuwait-listed companies and a foreign bourse operator.

Kuwait’s investment company Kamco, consultancy Oliver Wyman, and local and international law firms will work on the bourse privatisation along with TICG, the regulator said in a statement on its website. Not less than 6 per cent and not more than 24 per cent of the shareholding would be allocated to public entities and any unsubscribed shares will be referred to the winning bidder

Kuwaiti citizens will be offered 3.5 per cent of the shares as part of the offering.

“This event is a key stage in the privatisation of Boursa Kuwait, in response to the regulator’s desire that Kuwait Stock Exchange becomes a shareholding company,” it said in the statement, without specifying when the transaction is expected to be completed.

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Governments in the six-member economic bloc of GCC are looking to part-privatise state-owned assets to raise capital in the wake of lower oil revenues and the pivot towards diversifying their economies. Stock exchanges are among the assets lined up for public floats.

The Boursa Kuwait privatisation move follows Saudi Arabia’s plans to sell a stake in its stock exchange through a public float. Riyadh is vying to make Tadawul, the region’s biggest bourse by market capitalisation, only the second publicly-traded equities platform after the Dubai Financial Market.

"The Idea of privatising is to transfer part of the ownership from government to public sector which removes some bureaucracy and brings in efficiency,” said Tariq Qaqish, managing director of asset management at financial services firm Menacorp in Dubai. “It’s hard to predict what would be the impact [on investments], however, its proven in most of the cases that privatisation was the best route.

Oman’s market regulator meanwhile also plans to privatise the country’s Muscat Securities Market (MSM) via a share sale, media reports cited the bourse's director general Ahmed Al Marhoon as saying last year. Oman will create a holding company under the State General Reserve Fund that will assume ownership of the bourse, he said.

"There are a lot of successful stories globally of exchanges going public and investors felt the positive difference,” said Mr Qaqish.

Boursa Kuwait, one of the region’s oldest stock exchanges, was among the top performers in the GCC last year. Index provider FTSE Russell included Kuwait in its emerging market index in September, a move that is expected to bring $822 million of inflows to the bourse. FTSE picked Kuwait ahead of Saudi Arabia, which is also vying for an upgrade to emerging market status from both FTSE and fellow index provider MSCI.