Saudi Arabia

SEDCO Holding Group and AlShiaka seal strategic partnership

SEDCO Holding Group, a Shariah-compliant private wealth management organization, acquired 40% in AlShiaka, the Saudi men’s outfitters specialized in designing and making men’s thobes. Anees Moumina, CEO of SEDCO Holding Group, and Walid Al Andijani, AlShiaka’s CEO, sealed the deal in Jeddah at one of AlShiaka’s outlets on June 1st 2015. The partnership will utilize SEDCO Holding’s capital and expertise in corporate governance to drive the strategic growth of the company. This investment is in line with SEDCO Holding’s strategic approach to invest in viable new ventures in growth sectors in the region. AlShiaka now has 32 showrooms for retail purchasing and this has positioned the company’s market share within the top three among its competitors.

Strict foreign investment rules ‘may limit inflows’

Middle East fund managers have on balance become bearish on the region’s biggest stock market, Saudi Arabia, after oil’s rally ran out of steam and the Kingdom confirmed strict rules on foreign investment, a monthly Reuters survey shows. The survey of 15 leading investment firms, conducted over the past 10 days, shows none expects to raise its equity allocation to the Middle East in the next three months — the first time this has been recorded since the survey was launched in September 2013. The proportion intending to cut equity allocations has risen to 20 percent from 7 percent. Also, falling trading volumes and thin corporate news flow indicate that markets are already slipping into a summer lull.

MIDEAST DEBT-As Saudi bourse opens to foreigners, debt market beckons

As Saudi Arabian authorities prepare to open the stock market to direct foreign investment this month, they're laying plans for a fresh set of reforms: measures to expand and energise the corporate debt market. The Capital Market Authority wants to change things under a five-year strategy that would encourage issuance of sukuk and conventional bonds as alternatives to bank loans, which currently dominate corporate fund-raising. This would spread corporate risk beyond the banking system, making the financial sector more healthy, and provide more channels for Saudi Arabia's growing investment industry. The CMA plans to introduce rules for credit rating agencies in September and is developing guidance for special purpose vehicles.

Group planning sukuk issue

Saudi Binladin Group has begun marketing a 364-day sukuk issue to local investors in the kingdom which could raise up to one billion riyals ($265 million) for the construction firm. The transaction is being managed by BNP Paribas' Saudi unit and the investment banking arm of Gulf International Bank. Funds from the deal will be used to finance costs related to its work at the King Abdulaziz International Airport in Jeddah. The last time Binladin Group was in the bond market was in July 2013, when it sold a 1bn riyal 364-day sukuk, which carried a profit rate of 2.5 per cent. That transaction was arranged by the same two banks appointed for the current issue.

Saudi company studying feasibility of Sharia-compliant resort

Saudia Arabia’s Al Khozoma Management Company is conducting a feasibility study to develop a Sharia-compliant resort in the Maldives. Some 4,120 holidaymakers from the Middle East visited the Maldives this year, representing a market share of 3.7 percent. In January 2014, the ADK company in association with Turkish hotel giant Caprice Gold announced plans to build the first Islamic resort in the Maldives. The five-star, 673-room resort was to be built on Shaviyani Atoll Gaakoshibee. However, the two companies reportedly cancelled the agreement late last year.

Saudi Politics Blamed as Market Asks Where Did All the Sukuk Go?

King Salman has reorganized his cabinet, removed princes from government roles, merged ministries and realigned succession since ascending to the throne in January. As a consequence, Saudi companies have yet to market a single security in 2015, making it the country’s quietest start for Islamic sales in nine year. The companies need some stability before they start looking at sukuk-type issuance. Saudi Arabia is pursuing a $130 billion spending plan to diversify its economy away from oil, and has vowed to invest in major infrastructure projects. King Salman’s changes will impact many areas, especially financial markets.

Sedco sees more global presence by 2025

At its annual "Multaqa Sedco 2015", Sedco Holding Group has unveiled its growth strategy for 2025 through expansion of its investment ventures across the globe. The event gathered the Group's upper management, the heads of its operating companies, CEOs and senior executives, management boards, their partners along with the administrative cadre. Under the theme "Imagine Our Future with Synergy", the Group's thrust for the next decade was laid down with emphasis on teamwork, creativity and professional excellence as key to continuous growth and achievement of defined goals as enshrined in the company's "six values".

Saudi market regulator studying REIT listing rules - sources

Saudi Arabia's Capital Market Authority (CMA) is studying plans to introduce rules governing the listing of real estate investment trusts (REITs). The regulator has approached market participants in recent weeks about forming a panel which will report to it on areas including how REITs work in international markets. The CMA was not available to comment. Given the early stage of the plans and the slow pace of regulatory progress in the kingdom, it is likely to take some time to draw up even draft rules for REITs, securities which trade on stock markets but which invest directly in properties and distribute profits as dividends.

CEO of Saudi’s Al Rajhi Bank resigns, new head appointed

Al Rajhi Bank, Saudi Arabia’s second largest bank by assets, is to replace its chief executive, with the new head’s priority likely to be reversing its fortunes after seven straight quarterly profit drops. Suleiman bin Abdul Aziz al-Zabin resigned as chief executive for personal reasons, effective May 17, it said on Sunday in a statement. His replacement would be Steve Bertamini, who had been appointed chief executive, effective from May 18, it said. The bank’s consumer business has been hit by new rules and tougher competition from other lenders in the kingdom. It has one of the highest exposures in the financial sector to the retail segment.

Alkhabeer Capital launches its "Waqf" program

Alkhabeer Capital , an asset management and investment firm based in Saudi Arabia, announced the launch of its "Waqf" (endowment) program, intended to provide advisory services for structuring Waqf entities and managing its assets. Through its Waqf program, Alkhabeer is targeting educational and charitable institutions, family offices, high net worth individuals and other philanthropists who aspire to establish Waqf entities. The program addresses the challenges of traditional Waqf by providing Waqf structures in compliance with best standards of governance, disclosure and independent supervision to ensure the management of the Waqf affairs in accordance withterms of the Waqif (Waqf founder).

Saudi British Bank plans capital-boosting sukuk sale - sources

Saudi British Bank (SABB) is planning to sell a riyal-denominated sukuk that will boost its capital reserves, with an announcement set to be made as early as next week. The issue will boost SABB's Tier 2, or supplementary, capital and will be arranged by HSBC's Saudi Arabian unit. The sukuk could be worth 1.5 billion riyals ($400 million) and will have a 10-year lifespan but a clause that will allow the bank to redeem the issue at the end of the fifth year. Riyad Bank announced plans to issue a 4 billion riyal bond to boost its capital base earlier this week. It will have the same 10-year, non-call five, structure that SABB is planning to offer.

Sukuk industry: SABIC's pioneering role in spotlight

The tenth edition of Euromoney Saudi Arabia conference concluded on Wednesday with a firm belief that multisectoral reforms to diversify the Kingdom's economy an approach to look beyond the oil sector will add value to the local market with financial dynamism. Experts in the first session of the concluding day on sovereign bonds and sukuk referred to the intersection of ethical investment and Islamic finance in the wake of the Tadawul opening up to foreign investors for the first time. The panelists observed that in the context of the global financial crisis Islamic finance is seen as a significant option in international market which is good for the Kingdom that plays a leadership role.

Saudi Arabia expected to retain popularity in private equity investment

Saudi Arabia will remain a favoured destination for private equity investment in the coming years in spite of volatile oil prices and instability in neighbouring Yemen, investment professionals said. Lower oil prices in the past year are unlikely to affect the growth in consumer-facing sectors such as health care and retail, making companies operating in such sectors attractive targets, according to Huda Al Lawati, a partner with Abraaj Capital in Dubai. But sustained lower oil prices may have an impact on deals in infrastructure and construction sectors, according to Sameer Nawaz, the managing director and co-head of investment banking at Saudi Fransi Capital in Riyadh.

Saudi CMA: foreigners can buy into IPOs on case-by-case basis

The CMA announced on Monday rules allowing foreign institutions to begin investing directly in the stock market, subject to restrictions such as a 10 percent cap on combined foreign ownership of the market. On the other hand, foreigners will be allowed to buy directly into initial public offers of shares in Saudi Arabian companies on a case-by-case basis. IPOs are a special matter because they are usually priced in Saudi Arabia well below market value, as a way to spread the kingdom's oil wealth among its citizens. Letting foreign investors buy directly into the offers could be politically sensitive.

SAMA ‘will welcome insurance mergers’

A number of Saudi insurance firms have been loss-making for years because of severe competition in the market, where large companies with capital of some SR1 billion ($267 million) dominate small firms capitalized at around SR200-SR400 million, which find it hard to compete. That's why Saudi Arabian Monetary Agency (SAMA) would welcome mergers among local insurance companies as long as they were positive for all parties, said Governor Fahad Al-Mubarak. He said SAMA was working hard with the managements of insurance firms to study their internal situations and develop restructuring plans so they could return to profitability.

Islamic banking industry in KSA set to reach $683 billion by 2019

The Islamic banking industry in Saudi Arabia is set to achieve $683 billion of Shariah-compliant assets by 2019, according to EY’s World Islamic Banking Competitiveness report. A strong demand from customers, both retail and corporate, has led to significant growth in Islamic banking in Saudi Arabia resulting in 54 percent of all financing being Shariah-compliant in 2013. Overall, the size of Islamic banking assets in Saudi Arabia has nearly doubled from 2009-2013. One in three of the positive sentiments analyzed in the kingdom were about branch experience, indicating that customers were generally satisfied in this area of service. While online and mobile banking services has taken off well in Saudi Arabia, it’s sustainability remains a cause of concern.

Foreign investors expected to enhance market efficiency in Saudi Arabia

The Capital Markets Authority (CMA) is planning to allow in foreign investors from June 15. Mohammad Al Jadaan, chairman of CMA, expects a lot of benefits from the entry of foreign players into its stock markets. It is expected that the level of studies, research and evaluation done on the market in general and on the listed companies in particular would be higher which would provide more accurate information and more fair assessments, he said. This would also help to raise the level of the research and studies on the Saudi capital market, he added. The CMA is expected to publish the rules for foreign institutions on May 4, while rules will be effective June 1, and the QFIs will be allowed to invest in listed shares starting from June 15.

Malaysia and Saudi facing Iran’s rising finance power

With the easing of economic sanctions against Iran, the country is expected to unleash its enormous potential of Islamic finance and enter the global stage with new Shariah-compliant products at a size that could threaten the dominance of Malaysia and Saudi Arabia in the sector. Iranian banks represent the world’s largest financial system based on Shariah law. However, due to the sanctions, the country has so far only marginally participated in the global Islamic finance sector and thus did not benefit from the rapid global growth of Islamic finance in the recent past. The entire banking system in Iran is Shariah-compliant, and there are no conventional banks to compete with.

Gulf's largest utility firm says Q1 net loss more than doubled

Saudi Electricity Co (SEC), the Gulf's largest utility firm, has reported its net loss for the first quarter more than doubled. It lost 1.94 billion riyals ($517.4 million) during the three months to March 31, compared to a loss of 913 million riyals during the corresponding period of 2014. The utility cited the costs of implementing an order from the electricity regulator on power usage by top manufacturers, as well as other expenses, for the decline in earnings. It did not elaborate. During the first quarter, the firm paid 545 million riyals to employees in bonuses as part of a scheme to celebrate the Saudi royal succession. Besides, SEC's results are highly seasonal because of the big swing between power demand in winter and in summer.

Saudi Silence Frustrates Foreigners on Eve of Bourse Opening

Investors are no closer to understanding how the opening of Saudi Arabia’s stock market will work than they were in August, when the country published draft rules on the plan. Eleven weeks before the deadline that the Middle East’s largest bourse set itself to give foreigners direct access to the market, the Riyadh-based Capital Market Authority has yet to explain how it will square the new rules with existing restrictions on foreign involvement in Saudi businesses. The lack of clarity underscores the difficulty the world’s biggest oil exporter has in giving outsiders greater influence. The kingdom is seeking to attract increased investment to the $521 billion stock market without angering conservatives dedicated to preserving the nation’s Islamic roots.

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