The IPO

Saudi Arabia is undergoing a historic transformation, which relies heavily upon a solid financial ecosystem and advanced capital markets. Saudi Tadawul Group has been an integral part of this and a major contributor to the transformation’s success, supporting the continuous development of Saudi Arabia’s capital markets.

The transformation of the Group into a holding structure earlier this year paved the way for the successful IPO of Saudi Tadawul Group Holding Company on 8 December 2021.

• Saudi Tadawul Group floated 36,000,000 shares, representing 30% of its issued share capital. Final allocations were 70% to institutional investors and 30% to individual investors.
• The IPO saw significant demand from institutional and retail investors with the offering being 121x oversubscribed by institutional investors generating SAR 458 Bn in demand. The retail tranche was 4.4x oversubscribed, generating SAR 5.02 Bn in demand.
• The offering shares were priced at SAR 105 per share at the top of the Company’s initial price range, implying a market capitalization of SAR 12.6 Bn at the time of listing.

The significant investor demand for the listing is testament to the strong growth potential of both the Saudi Tadawul Group and Saudi Arabia as a global investment destination.

The IPO has created a range of benefits for market participants, including greater transparency and strengthened governance. The listing has also provided a greater platform for innovation, which is at the heart of Saudi Tadawul Group’s mission.

A National Champion and Integral to the Delivery of Vision 2030

• The Kingdom is currently undergoing a significant economic transformation. At the heart of the Kingdom’s economic momentum is the Vision 2030 programme of the Saudi Government. Launched in 2016, the programme aspires to reduce the country’s dependency on oil, diversify its economic resources, and enhance its growth profile.
• As the only G20 economy in the region, the Kingdom is well-positioned as the dominant economy in comparison to its neighbours. With a total estimated GDP of SAR 2.6 Tn for 2020, the Kingdom forms nearly 48% of the total GDP among the member states of the Gulf Cooperation Council (GCC).
• The Company is the foundational pillar for the delivery of the FSDP which has the stated goal of developing an advanced capital market to support the broader realization of Vision 2030.

The Group CEO is signing the board at Saudi Tadawul Group listing ceremony

 

A Differentiated Business Model – Integrated, Scalable, and Diverse

• The Saudi Tadawul Group’s integrated and diverse business model is a key enabler for sustainable top-line revenue growth and innovation. The operational independence of each subsidiary facilitates an agile environment and supports rapid responses to evolving global and regional market trends.
• The structure will foster growth and innovation while providing strategic flexibility. This in turn will allow it to compete with other exchanges globally.
• With its subsidiaries, the Saudi Tadawul Group provides end-to-end services from listing, trading, post trade, and data and technology services.

Primed to be the Center for Regional Capital Formation

• Saudi Tadawul Group has strong strategic and competitive positioning supported by its scale, growth profile, and role at the heart of a large-scale economic transformation agenda envisaged by Vision 2030 and the growing global relevance of the Kingdom on the international stage.
• The Saudi Exchange is amongst the largest exchanges globally by market capitalization of listed companies (approximately USD 2.8 Tn as of 31 December 2021.)
• The Company has no close peer within the MENA region and accounts for approximately 75% of total regional market capitalization as of 31 December 2021 and approximately 74% of regional traded value YTD as of 31 December 2021.
• The number of Qualified Foreign Investors (QFIs) is in excess of 2,600 as of 31 December 2021, with a growth rate of 14% year-on-year.
• The successful execution of the Saudi Aramco IPO, the largest ever IPO globally, enhanced the profile of the Company in successfully delivering an IPO of global relevance. In addition, the growing proliferation of new classes of securities and platforms (Nomu – Parallel Market, fixed-income securities, REITs, CEFs, and derivatives) distinguishes the Company as a regional leader in product and business development.

Members of the IPO management team involved in the Saudi Tadawul Group IPO

 

The Company has Delivered a Strong Financial Performance Characterized by Significant Growth and Increasing Margins

• From 2019 to 2021, the Company’s operating revenue grew at a CAGR of 44%.
• This growth momentum has continued in the 12 months ending 31 December 2021 with an increase in operating revenues of 8.01% over the comparative period in the previous year.
• This top-line performance has translated into increased EBITDA margin of 13.10% for the period ending 31 December 2021 compared to the previous year.
• The Company’s net income after zakat grew by 17.42% in the period ending 31 December 2021, given the substantial operating leverage in the business.
• The degree of organic capital and free cash flow generation has enabled the Company to maintain a well-capitalized balance sheet and positions the Company with strong dividend potential.

A Seasoned Leadership Team with a Track Record of Delivery

• Saudi Tadawul Group has a seasoned and visionary management team with strong capital markets expertise.
• The Executive Management team (comprising of eight Senior Executives and four CEOs of subsidiaries) has over 220 years of combined experience which has led the Company to achieve significant growth in recent years in terms of products, services, and infrastructure.
• Ongoing delivery of the 2018-2022 five-year strategic plan has witnessed a number of key achievements, including expansion into financial derivatives with the launch of index futures, enhancement of debt markets trading infrastructure, delivery of large-scale post-trade capabilities to bring the Company in line with other leading exchanges globally, and development of a new data centre to enable business continuity and to provide higher availability for mission-critical systems for the Company.
• This executive management team is supported by a Board of Directors with comprehensive experience in local and global capital markets.

Significant Growth Opportunities Ahead

• The Company’s profile is supported by strong potential for continued growth based on the positive structural characteristics supporting the Kingdom's economy, as well as many new business initiatives facilitated by the recent corporate reorganization and building upon the Company’s project and initiative execution track record in business development.
• The organic growth drivers for the business are, as previously mentioned, underpinned by the Vision 2030 and the Kingdom's growing economic profile, which together are expected to drive new issuances across asset classes and strong capital markets activity in the Kingdom.
• In particular, key new initiatives include the continued expansion into financial derivatives. The Company launched, MT30 index in August 2020 and plans to follow with single stock futures, options, data, and indices services, clearing across cash and debt markets, and new technology and data revenues attributable to the launch of Tadawul Advanced Solutions Company (WAMID), a newly created subsidiary focused on solutions and pioneering technologies.