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Saudi Arabia to let foreign investors participate in IPOs

Staff Writer |
Saudi Arabia will allow foreign investors to subscribe to initial public offerings from January.

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The Capital Market Authority has approved regulations on book-building in IPOs that include qualified foreign investors, which will be implemented January 1, according to a statement posted on the regulator’s website.

Financial advisers “may apply these instructions on any offering before that date” with approval from the issuer, according to the statement.

Saudi Arabia is opening its stock markets to increased international participation after oil prices halved in the past two years.

The Tadawul Stock Exchange started allowing limited foreign direct investment in June last year under rules that govern which entities can invest and how much of each company and the market they can own, and will next month ease restrictions on who can qualify as a foreign investor.

Saudi Arabia Oil, the energy giant known as Aramco, controls one-fifth of the world’s petroleum reserves and is thought to be worth more than $2 trillion, making it the world’s most valuable company.

The kingdom intends to sell up to 5 percent of Aramco as soon as 2017, according to the country’s influential Deputy Crown Prince Mohammed Bin Salman.

Regulations taking effect on Sept.4 cut the amount of assets foreigners must have under management to invest directly in the nation’s stocks to 3.75 billion riyals ($1 billion) from 18.75 billion riyals.

They will also allow individual foreign investors to own not more than 10 percent of shares outstanding in a single company, up from 5 percent. Sovereign wealth funds and university endowments will be allowed to invest under the new rules.

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