RIYADH: Saudi stock exchange operator Tadawul Group is ramping up plans for mergers and acquisitions to expand the Kingdom’s capital markets amidst a wave of local listings, a senior executive said.
In an interview with Bloomberg in London, Chief Strategy Officer at Saudi Tadawul Group Lee Hodgkinson highlighted that the firm is targeting “digestible” and “strategically relevant acquisitions,” though he did not elaborate on specific targets.
“Mergers and acquisitions will be more integral to our future strategy than in the past,” Hodgkinson said.
The Saudi bourse has seen an influx of companies listing in recent years. This aligns with the Kingdom’s Vision 2030 initiative led by Crown Prince Mohammed bin Salman, which aims to deepen capital markets and reduce reliance on oil.
This year alone, stock sales on Tadawul have raised $15.6 billion, including a significant offering from energy giant Saudi Aramco, Bloomberg reported.
While Hodgkinson did not dismiss potential acquisitions of other stock exchanges down the line, he emphasized that Tadawul’s immediate focus is on diversifying its revenue streams.
Earlier this year, the firm acquired a stake in the Dubai Mercantile Exchange’s parent company for $28.5 million, marking a strategic move into the commodities market.
Looking ahead, Tadawul is exploring various post-trade services, including stock lending and collateral management, alongside developing data services like market indices.
According to Hodgkinson, the team will “exercise a great deal of discipline” on value and possible synergies while evaluating purchase possibilities. He added that M&A activity is intended to support the group’s organic growth strategy.
In August, Bloomberg reported that the Saudi Tadawul Group is intensifying its focus on attracting Asian investors to boost liquidity and trading activity in the region’s largest market.
This push comes as foreign ownership in Saudi capital markets has grown significantly, reaching SR401 billion by the end of 2023, a record high.
Net foreign investments rose by 7.7 percent from the previous year to SR198 billion ($52.77 billion), highlighting the success of the Qualified Foreign Investor program, first introduced in 2015 to open up the Saudi market to global backers.
According to Bloomberg, the Tadawul Group has identified Asia as a key area of focus, aiming to strengthen ties with major Asian markets to diversify the Kingdom’s investment sources.
In the interview, Hodgkinson highlighted that the group sees immense investment potential from markets like China and India.
Tadawul also plans to expand beyond equities into debt markets, commodities, and advanced post-trading services to position itself as a competitive international market player.
Increased mergers, acquisitions, and partnerships are anticipated as the company pursues these goals.
