Académique Documents
Professionnel Documents
Culture Documents
Listing Guide
Table of contents
1 Introducing Tadawul
1.
Listing
36
Incorporation of Tadawul
Post-listing phase
37
37
Key objectives
Tadawul fees
39
4.
4
40
14
42
What is an IPO?
16
45
Why list?
16
46
Advantages
17
Key challenges
18
Introduction to CMA
50
19
50
20
50
22
51
25
52
Appoint advisors
28
Preparation phase
30
Tadawuls services
60
34
Trading services
60
35
Depository services
61
Book building
36
Listing services
62
Subscription period
36
2.
2 Going Public
10
5.
5
6
6.
7.
7
Tadawul Services
Listing Guide
48
58
64
Introducing Tadawul
4
Listing Guide
Timeline
Introducing Tadawul
\\ Qualified foreign
investors allowed to
invest in listed shares
2015
2013
Incorporation of Tadawul
Tadawul traces its history back to the mid-1930s when the Arabian Automobile
Company was established as the first joint stock company in Saudi Arabia. Regular
expansion of economic markets and the introduction of localownership of part of
foreign banks led to the emergence of large corporations in 1970s. SAMA was the
government body charged with regulating and monitoring market activities until CMA
was established on 1424H/2003G. CMA is the sole regulator and supervisor of the
capital market. It issues the required rules and regulations to protect investors and
ensure fairness and efficiency in the market.
On 1428H/2007G, the Council of Ministers approved the establishment of Saudi Stock
Exchange Company (Tadawul).This was in accordance with Article 20 of the Capital
Market Law. Tadawul is the largest stock exchange in the Middle East region, with the
largest initial public offerings (IPOs), capital raised and market capitalization.
\\ Launch of Tadawulty
services
2011
\\ Launch of ETF trading
2010
\\ Electronic voting
\\ Launch of new identity
\\ World federation of
exchange membership
\\ Launch of e-trading for
sukuks and bonds
2009
\\ Applying sector index
2008
\\ Formation of
Saudi Stock Exchange
(Tadawul)
\\ Beginning of electronic
settlement and clearance
(T+0)
\\ Framework to establish
stock exchange and
Capital Market Authority
2001
1990
\\ Establishment of Saudi
Share registration
company
2007
2003
\\ Automated trading
system launched
1985
1984
\\ Introducing the
new tradable rights
framework
\\ Ministerial Committee
formed to develop and
regulate the market
Listing Guide
Key objectives
Tadawuls main objectives to guide its vision are as follows:
Vision
To be an integrated financial
exchange that fosters the
development of a diverse
Saudi capital market and
competes internationally
Mission
To offer sound, efficient and
attractive capital market
products and services that
deliver superior value to
our market participants and
stakeholders
Listing Guide
Sector
Sector
Insurance
2010
2011
2012
2013
2014
380,000
160,000
60,000
157,500
413,100
1,328,400
612,000
331,500
540,000
729,000
Petrochemical Industries
Industrial Investment
757,500
234,000
Cement
650,000
489,500
1,796,000
900,000
275,000
2010
2011
2012
2013
2014
Insurance
31
31
33
35
35
14
15
16
16
16
Retail
396,000
539,600
364,500
900,000
1,020,000
22,500,000
14
15
15
16
17
Petrochemical Industries
14
14
14
14
14
Multi- Investment
350,000
Industrial Investment
13
13
14
14
14
Cement
10
12
13
14
Telecommunication &
Information Technology
11
11
11
11
12
Transport
Retail
10
10
11
12
14
1,368,000
825,000
Multi-investment
Telecommunication &
Information Technology
3,832,600
1,727,000
5,326,000
1,962,000
25,229,000,000
Transport
146
150
158
163
169
TOTAL
10
The table below highlights the annual amount of capital raised (SR 000) between 2010 and 2014
across various sectors
TOTAL
11
Listing Guide
1,753
759
1,000
2010
12
1,370
1,400
1099
1,250
1,271
Trading Value
1,500
1,325
Market Cap
SR billion
1,750
1,813
1,929
2,000
2,146
At the end of 2014, the market capitalization of all companies listed on Tadawul was SR 1,813 billion,
and the value of shares traded was SR 2,146 billion. The chart below highlights the trend with respect
to market and trading value over the past 5 years.
2011
2012
2013
2014
13
Listing Guide
Going Public
14
15
Listing Guide
Going Public
Advantages of Listing
What is an IPO?
Advantages
of listing
Enhances visibility
of the company
Access to wider
capital pool
Creates certainty
about a companys going
concern status
Enhances liquidity
for shareholders
Why list?
Going public is a significant transformational decision in a
companys development that requires a series of planned,
pervasive changes to the company, its owners and its culture
to achieve long-term strategic objectives including business
continuity, market leadership and shareholder wealth value
maximization.
Encouraging employees
commitment
Improves credibility
of a company in
the market
Easier to benchmark a
companys market position
in a sector
16
17
Listing Guide
Tadawul provides a platform for companies to attract various investors through access to the exchanges large liquidity pool
and broad investor base complimented by its state of the art trading infrastructure which connects investors, traders and
brokers. Saudi Arabia being the largest economy within the region adds to the strategic significance of Tadawul and enhances
its attractiveness further.
Transparency/Disclosure
and greater responsibility
Tadawul also has a best in class primary market team which is solely focused on ensuring that businesses maximize value by
being listed on the Exchange.
Best in class
prim
ary market team
Why Tadawul
Lo
n
ns
g-t
erm i
atio
nvestor rel
supp
ort post - IPO
18
19
Listing Guide
Acc
st
ess to
the bigge
eco
nomy i
ion
n the reg
20
21
Listing Guide
23
Listing Guide
24
Appoint
Advisors
Ensure overall readiness,
Conduct due diligence,
prepare valuation,
prospectus and application
forms
Preparation
phase
Submit IPO
Application
CMA reviews the
application and assesses
the adequacy of discoursers
in the prospectus and if
acceptable, announces its
approval through Tadawul
and CMAs website
Filing of an application to
CMA along with all relevant
documents
CMA review
and
decision
IPO book
building
Subscription period, IPO
proceeds received, share
holder allocation and
refunds, provide Tadawul
with shareholder file
Appointment of Financial
and Legal and other
Advisors
Marketing to institutional
investors, allocation
between retail and
institutional determined
Subscription
period
List on
Tadawul
After completing
the information and
documentations required
by Tadawuls and CMAs,
an announcement will be
made in Tadawul and CMAs
websites, and secondary
trading will begin
25
Listing Guide
26
27
Listing Guide
Advisors
Lead Manager
28
Financial
Advisor
Legal Advisor
Underwriter
\\ Ensures compliance
with CMA rules
\\ Communicates with
CMA and investors
\\ Provides advice to
the company
\\ Manages the
institutional book
building process
\\ Undertakes the
legal due diligence
\\ Provides advice on
all legal matters
\\ Ensures legal
sections of the
prospectus are in
accordance with the
Listing Rules
\\ Underwrites
the issue and
sometimes involves
other underwriters
Financial
Due Diligence
Advisor
\\ Undertakes the
financial due
diligence
Public Relations/
Media Advisor
\\ Manages media
campaigns and
road shows
\\ Works on brand
enhancement
29
Listing Guide
Appoint a board
with independent
members
Improve internal
control measures
Establish a
qualified audit
committee
30
Establish and
implement an
acceptable
executive
compensation
structure
Implement board
meetings and
reporting process
31
Listing Guide
Valuation considerations
The valuation of the company and the related price at which
the shares are offered to the investors is a critical aspect of
the IPO preparation phase. Following is a brief description
of different valuation methods that are typically adopted to
value a business:
\\ Discounted Cash Flow Method -The DCF method, which
is an income based approach, is underpinned by the
premise that the value of a business is based on the
future cashflows that it will generate. This method
involves estimating the future free cash flows on a year
by year basis.It applies an appropriate discount rate on
the projected free cash flow, which takes into account
key business and operating risks of a business. It also
takes into consideration the companys capital structure
\\ Comparable company method The comparable company
method, which is a market approach based method,
values a business based on the trading prices of shares
of companies engaged in similar lines of business and
operating in the same industry sector as the company
being valued. It entails identifying a suitable/relevant
market multiple and applying these multiples to the
companys financial parameters. Some of the commonly
used market multiples are:
Price to Earnings (P/E)
Enterprise Value to EBITDA (EV/EBITDA)
Price to Sales (P/S)
Price to Book value (P/BV)
32
Prospectus preparation
The prospectus plays a vital role in the issuance of company
shares. It is an official document published by the company
that contains all the key information about the companys
business, management, financial performance, risks, future
plan of action etc. A prospectus also includes information
relating to the securities to be traded and related terms and
conditions. This information enables an investor to make an
informed investment decision for that security.
33
Listing Guide
\\ Subscription form
\\ Declarations as per Annex 2 outlined in the Listing Rules
The list provided above is not exhaustive, but illustrative in
Review
Application &
Prospectus
Announce
Decision on
Website
Decision
Decision
of association
\\ Annual report and audited annual financial statements
of the issuer
34
35
Listing Guide
Pre-marketing requirements
The company needs to prepare detailed investor presentations
together with the draft prospectus and other company media
information prior to the road show of presentations to the
selected institutional investors. The investor presentations
are conducted by the management team. Additionally
institutional investors would have access to key documents;
including prospectus and valuation model, contained in a data
room.
Building a pipeline of potential investors is also an
important component of the pre-marketing exercise with
the underwriting team. Companies also should be prepared
to directly reach out to potential investors through ongoing
dialogue, conference attendance and marketing visits.
Extensive marketing
Marketing should be conducted through effective road show
presentations, the focus of which is communicating the IPO
story, the companys strategy and future growth plans
all of which support the valuation price range. These road
shows comprise extensive meetings and discussions with
prospective investors that help gather ideas about their
36
Post-listing phase
After a company becomes public and its shares are listed,
priced and allocated to investors, the post-listing phase of
activities begins. These activities are equally as important as
the pre-IPO preparations. A listed company is required to:
37
Listing Guide
The table below shows the total offer value for companies that listed during the period 2010 to 2014
Tadawul fees
Tadawul charges annual listing fees based on the paid up
Total value of
offered shares
(SAR 000)
Total cost
of subscription
(SAR 000)
Cost to
value %
Herfy Foods
413,100
13,667
3.31%
AlSorayai Group
243,000
17,000
Shaker
514,500
Al-Khodari
180,000
+100 200
220,000
+200 500
300,000
7.00%
+500 2,000
400,000
22,000
4.28%
+2,000 5,000
500,000
612,000
25,000
4.08%
+5,000 10,000
600,000
Aslak
331,500
17,000
5.13%
+10,000
700,000
Extra
396,000
16,000
4.04%
Takween
234,000
21,000
8.97%
AlTayyar
1,368,000
50,000
3.65%
1,328,400
33,000
2.48%
539,600
20,000
3.71%
Care
364,500
14,000
3.85%
Bawan
540,000
26,000
4.80%
Farm Superstore
270,000
13,000
4.81%
Al Hokair Group
825,000
26,000
3.15%
Al Hammadi
630,000
20,000
3.17%
22,500,000
25,000
0.11%
729,000
20,000
2.74%
Year/issuer
2010
2011
2012
Dallah Health
2013
2014
NCB
EIC
38
Cost
39
Listing Guide
41
Listing Guide
Advantages
Of Corporate
Governance
committees.
board reports
Ensures effective
internal controls
Regulations.
governance.
http://www.cma.org.sa/En/Pages/Implementing_
Regulations.aspx
42
Improves transparency
and disclosures
Secures rights of
shareholders
governance:
43
Listing Guide
Encourages investment
Established norms and effective monitoring of compliance by
the regulatory body helps to win the confidence of investors
and thereby enhances the scope for additional investment.
Good corporate governance can reduce the risk premium
investors place on each company which can have the effect
of increasing the valuation of the companys shares.
Challenges
Of Corporate
Governance
Enhanced governance
culture
Improving process
of internal control
Effective work by
committees
44
ation to disclose
Oblig
developme
i
ter al
nts
ma
Disclosure
relate
d to securities
Obligations
Obligations
And
and
Disclosures
disclosures
Disclosure of
finan
cial information
Miscellaneous
disclosures
45
Listing Guide
Miscellaneous disclosures
Certain transactions or events which cannot be classified in
the above categories but are essential to be disclosed as per
the Listing Rules:
\\ Alteration in the articles of association, location of office
or auditor of the company
46
Investor relations will not automatically guarantee a company a heightened profile, easy access to capital, liquidity in its shares or a fair
share price. There are other external factors in addition to a companys own performance, including economic factors, confidence in the
management and the competition for investors money which can have an impact on how a company is perceived by the investor community
Investor relations
Output Information
through investor relations
Investor
community
Company
\\ Institutional investors
\\ Private investors
\\ Analysts
\\ Media
Result
\\ Liquidity achieved by the companys shares. Regular updates to the investment community help create a higher profile forthe
company. Depending on the availability of shares, this can attract pools of buyers and sellers and increase the potential for
higher frequency trading in the companys shares.
\\ Fair valuation of the companys shares. Communication with the investment community enables a company to record its
performance and its strategy using publicly disclosed information. It also helps a company to understand how it is being
evaluated and whether the markets expectations are in line with its own
\\ Availability of information for market ranking in terms of size, profitability, growth, etc. can help in peer benchmarking by investors.
Return
Liquidity
Easier access to
capital
47
Listing Guide
Fair valuation
49
Listing Guide
Formation
of the Capital
Market Law
Introduction to CMA
The Capital Market Law was promulgated through Royal
decree No. M/30 issued on 1424H/2003G. Article 4 of the
Capital Market Law officially established the Capital Market
Authority with the objective of formulating regulations to
ensure an appropriate investment environment and the
protection of investors in the Saudi Arabian capital market.
Duties of CMA
\\
\\
\\
\\
\\
\\
\\
\\
\\
\\
\\
\\
Prudential Rules
The Resolution of Securities Disputes Proceedings Regulations
Anti-Money Laundering and Counter-Terrorist Financing Rules
Merger and Acquisition Regulations
Investment Funds Regulations
Corporate Governance Regulations
Real Estate Investment Funds Regulations
Securities Business Regulations
Authorised Persons Regulations
Market Conduct Regulations
Offers of Securities Regulations
Listing Rules
Insider trading
50
Untrue statements
What is an untrue statement?
A statement is considered to be untrue in the following cases:
\\ Discloses false or inaccurate information
\\ Influences another person to make false or inaccurate
information
\\ Misrepresents material fact in a statement
\\ Influences another person to misrepresent a material fact
\\ Hides a material fact linked to a statement while it is
being made
Market conduct prohibits any individual from furnishing untrue
statements to influence the price of securities in the capital market.
51
Listing Guide
BSE
QSE
DFM
120.0%
%-7.19
%5.56
%18.36
18.6%
%11.99
63.1%
%14.23
24.2%
27.2%
17.2%
%18.6
25.5%
%63.1
2012
2012
1.2%
%27.2
%17.2
19.9%
%24.2
9.5%
2.1%
%25.5
%9.5
%19.9
2011
Would be permitted
if listing rules in foreign
2013
2013
2014
Source: Saudi stock exchange (Tadawul)
52
What is cross-listing?
Apply to
Capital Market Authority for
listing in Saudi
%-13.43
%-30.0
%-2.37
%-15.0
-4.8%
-30.0%
%0.0
-6.8%
-15.0%
%15.0
%1.2
6%
0.0%
%30.0
-15.7%
15.0%
%45.0
%-6.8
-17.0%
%-4.8
-11.7%
30.0%
%60.0
%6
45.0%
%75.0
%2.1
1.1%
60.0%
%90.0
-16.4%
75.0%
MSM
%105.0
-20.1%
90.0%
%120.0
-3.1%
105.0%
ADX
Foreign company
listed on foreign
exchange
107.7%
KSE
%107.7
TASI
Listing on
Tadawul if
complies with
the conditions
53
Listing Guide
BSE
QSE
DFM
ADX
MSM
107.7%
TASI
120.0%
130.00
125.00
105.0%
120.00
18.6%
24.2%
MSCI
EM
MSCI
EURO
(DM)
MSCI
North
America
(DM)
100.00
MSCI FM
85.00
54
r-1
4
No
ve
m
be
r-1
4
De
ce
m
be
r-1
4
be
Oc
to
r-1
em
be
gu
st
-1
pt
Se
14
Au
ly-
Ju
ne
-1
4
Ju
-1
ay
M
-1
ril
Ap
-1
ch
ar
M
ry
ua
br
ar
2013
Fe
nu
2012
Ja
2011
-1
4
80.00
y-
2014
90.00
% 0.8
% 6.3
% 12.9
% 2.6
27.2%
17.2%
25.5%
110.00
95.00
% 4.8
-4.8%
-6.8%
-15.7%
-11.7%
-17.0%
-16.4%
-20.1%
-30.0%
-3.1%
0.0%
TASI
105.00
% 0.1
6%
15.0%
2.1%
1.1%
30.0%
1.2%
19.9%
45.0%
9.5%
60.0%
115.00
14
75.0%
63.1%
% 72.5
90.0%
-15.0%
55
Listing Guide
2012
End 2011
Bursa
Malaysia
2013
End 2012
Singapore
Exchange
Shenzhen
SE
Bombay
SE
Hong Kong
Exchanges
2014
End 2013
00
Saudi Stock
Market
Tadawul
269.1%
206.0%%265.7
%341.7
265.7%
Singapore
Exchange
2013
Shenzhent
SE
Bombay
SE
%46.3
42.7%
Bursa
Malaysia
%39.164.0%
%42.7
39.1%
113.5%
MKB
(Istanbul)
2012
%206.0
209.5%
%214.2
%188.2
214.2%
Egyptian
Exchange
%8.7
7.4%
50
50
%8.7
14.7%
%7.4
8.7%
100
100
%113.5
150
150
Source: Saudi Stock Exchange (Tadawul) & World Federation of Exchanges (WFE)
56
200
200
%30.2
33.1%
%21.0
30.2%
%38.4
21.0%
11,38,834
1,558,300
10,07,183
1,263,335
12,63,335
1,138,834
7,44,413
752,831
5,98,273
765,078
7,65,078
744,413
3,95,624
466,588
4,66,588
500,387
1,97,074
315,198
3,15,198
195,746
1,95,746
219,763
MKB
(Istanbul)
250
250
%33.5
47.7%
%37.7
33.5%
%36.1
37.7%
Egyptian
Exchange
300
300
%26.6
34.4%
%29.6
26.6%
%29.6
29.6%
Saudi Stock
Market
Tadawul
61,630
70,084
0
0
48,682
59,182
59,182
61,630
5,00,000
5,00,000
4,67,428
483,438
10,00,000
10,00,000
3,38,890
373,424
3,73,424
467,428
15,00,000
15,00,000
5,00,387
459,004
20,00,000
20,00,000
10,54,685
1,150,172
11,50,172
1,452,154
25,00,000
25,00,000
14,52,154
2,072,420
30,00,000
30,00,000
86.5% %137.8
%78.1
137.8%
%118.4
78.1%
35,00,000
35,00,000
31,00,777
3,233,031
22,58,035
2,831,946
28,31,946
3,100,777
Market capitalization of Tadawul compared to market capitalization of emerging market in last three years
Hong Kong
Exchanges
2014
Avg. 2011
Avg. 2012
Avg. 2013
Source: Saudi Stock Exchange (Tadawul) & World Federation of Exchanges (WFE)
57
Listing Guide
58
59
Tadawul Services
Listing Guide
Tadawul services
Tadawuls services
Trading
Services
Depository
Services
Listing
Services
One day
2.
Current week
3.
Current month
4.
Up to 30 days
Transparency
Fairness
Depository services
Trading services
Trading services include buying, selling, clearing and settlement of shares. Tadawul trading services combine all local equity
trading into one single market.
Its trading services also provide the transfer of ownership immediately after matching the buy and sell orders. It has an
efficient and short trading cycle and enables trading strategies that ensure that investors may buy and sell multiple times
during the day. It also provides accurate and speedy settlement to ensure that 100% of all trades are settled on the day
of execution.
60
on a regular basis.
Centre are:
1. Advanced Technology: It is the prime function of
investors in Tadawul.
61
Listing Guide
Additional services
Tadawul provides the following additional services to various
listed and unlisted companies that helps in increasing the
level of confidence and transparency, bridging the gap
Tadawul.
7. Media centre service: The media centre is designed to
administrative aspects.
this Guide.
http://tadawulaty.tadawul.com.sa
Listing services
62
63
Listing Guide
65
Listing Guide
FAQs
What is Tadawuls role?
\\ Company decision
\\ Subscription Period
\\ Appoint Advisors
\\ Preparation Phase
\\ Submit IPO Application
\\ CMA review and decision
\\ List on Tadawul
For further details, please refer to page 24.
66
For more details about the average cost, please refer to 37.
\\ Recording pledges
\\ Conducting corporate actions, such as capital increase/
decrease, mergers, or acquisitions
\\ Shareholders general meetings management & e-voting
services
\\ Electronic Share book reporting
\\ Electronic ownership inquiries
There is a team that can visit your company to present and
answer your questions regarding Tadawuls services for
closed joint-stock.
67
Listing Guide
Glossary
CMA
M&A
of Saudi Arabia.
EBITDA
company.
Private placement
performance of a company.
EPS
IPO.
SAMA
Institutional investors
SOCPA
service providers.
IPO
TASI
Listing
68
Disclaimer
This guide (the Listing Guide) and its contents are the sole property of the Saudi Stock Exchange (Tadawul).
It has been prepared with an intention to create awareness and a better understanding of the listing process and
to provide information relating to Tadawul and its activities. It is neither a comprehensive reference document
with respect to all IPO related material and requirements. It has not been written with an intention to provide each
and every guideline or requirements that need to be fulfilled to enable issuers to list shares. Anyone intending to
list shares of their companies must follow and meet all listing related requirements issued by the Capital Market
Authority (CMA). Additionally, the Listing Guide should not be relied upon or used as a substitute for specific legal
advice, financial advice or other applicable advice. It is recommended that readers seek appropriate professional
advice before taking any action.
The information contained herein is subject to change without any prior notice. The Saudi Stock Exchange (Tadawul) or
any other party associated with the preparation of the Listing Guide would like to highlight that the Listing Guide does
not purport to provide investment advice, nor do they bear the responsibility for any errors or omissions contained
herein. The Saudi Stock Exchange (Tadawul) or any other party associated with the preparation of the Guide disclaims
any liability whatsoever towards any party and makes no representations or guarantee and assumes no liability in
relation with the contents of the Listing Guide or any errors or omissions of information. The information contained in
this Listing Guide cannot be used for any claim, demand or cause action against Saudi Stock Exchange (Tadawul) or
any other party associated with the preparation of the Listing Guide.