The Middle East’s largest stock exchange said Thursday that it plans to launch an Initial Public Offering (IPO) in 2018, following the completion of a “readiness exercise and obtaining the necessary approvals,” according to a statement on the Saudi Finance Ministry’s website.
In June, Saudi Arabia opened its stock market to foreigners for the first time, easing regulations to enable investors to have direct access to stocks as part of broader government attempts to decrease the economy’s reliance on oil. CNN Money did a deep dive into this June decision, and reported that only the largest financial institutions such as brokerage houses, banks and fund managers were permitted to participate. Moreover, more than $5 billion in assets and +5 years of investment experience were required. Add to this that approved investors wouldn’t be allowed to own over 49% of a traded company.
Even after the June decision, 2015 marked the most poorly performing year for Saudi stocks since 2008 amid the oil price crash.
With oil revenue falling to an 11-year low, and with spending commitments in Yemen and elsewhere, the country announced a budget at the start of this week that significantly curbs spending and aims to further diversify the economy away from oil dependency.
Tadawul’s market cap is around $419 billion. It said in the Thursday statement that it will announce its readiness exercise developments as they happen.