Saudi Arabia Advances Capital Market with New Share Offering Framework

Saudi Arabia Advances Capital Market with New Share Offering Framework

Saudi Arabia’s Capital Markets Authority is advancing its regulatory framework by initiating a public consultation that allows significant shareholders to offer additional shares. This initiative, known as the “FMO” framework, was discussed by Abdullah Binghannam, the Deputy of Financing and Investment, during a panel at the Saudi Capital Market Forum in Riyadh. The FMO framework aims to enhance market liquidity and accessibility by enabling a controlled process for large shareholders to float extra shares, thereby increasing the free float.

Binghannam highlighted the authority’s efforts to collaborate with companies and shareholders to expand the market’s free float, emphasizing the goal of making Saudi Arabia’s capital market more attractive to a wider range of investors, including international ones. The authority’s dual strategy involves easing access and maintaining government regulations to international standards, which has resulted in a significant increase in international investor holdings in the Saudi capital market.

The panel also included Claire Suddens-Speirs from Rothschild & Co. and Richard Cormack from Goldman Sachs, who both praised Saudi Arabia’s proactive initiatives and liquidity status in the capital markets sector. The discussion underscored the importance of the debt capital market in Saudi Arabia, with Binghannam stating that it is a top priority with plans for substantial expansion.

Additionally, the Ministry of Human Resources and Social Development and the Saudi Exchange have signed a cooperation agreement to launch a Social Responsibility Index, further highlighting the country’s commitment to sustainable and responsible investment practices.

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