Markets

Beyout becomes Kuwait’s first stock market listing in two years

June 12, 2024, 1:28 PM

Traders on the floor of the Kuwaiti bourse, where Beyout became the first new listing since 2022

Gained 2.6% on listing price
17 times oversubscribed
Market outperforming this year

Beyout Investment Group rose 2.6 percent against its initial public offering price on its Boursa Kuwait debut on Wednesday as the family-owned business became the country’s first new stock market listing since 2022.

Saudi Arabia and the UAE have been home to a flurry of initial public offerings in the past few years as governments sold minor stakes in state-owned business and other privately run companies also went public.

Yet there has been little similar activity in Kuwait, where disagreements between parliamentarians and the government, which is controlled by the country’s ruling family, have stunted efforts to expand the country’s non-oil economy.

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This year, however, Kuwait’s main market has outperformed its Gulf peers, rising 7.3 percent to June 10.

In comparison, Saudi Arabia’s index slid 1.9 percent over the same period, Abu Dhabi lost 6 percent, Dubai slipped 1.3 percent and the FTSE Qatar Index tumbled 10.2 percent.

Kuwait’s overperformance seems partly related to the emir’s decision in mid-May to suspend the country’s democratic process for up to four years. Some investors hope this will enable the ruling family to enact meaningful economic reforms more swiftly.

“There is a lot of positivity towards what will happen within the government… we were lagging within the context of the other GCC countries,” said Abdulrahman Al Khannah, chief executive of Kuwait’s Beyout Investment Group.

“The last four to five years, [we] haven’t had an efficient democracy when it comes to really benefiting the country.”

Beyout’s shares ended Wednesday at KWD0.513. It sold 30 percent of its stock at KWD0.5 per share, raising KWD45 million ($147 million) in what the company describes as a private secondary offering.

Unlike a conventional IPO, the sale was restricted to institutions and so-called qualified investors who had traded a certain minimum of shares or who own at least KWD100,000 in assets managed by a licensed financial services firm.

The listing was 17 times oversubscribed, receiving orders totalling KWD771 million. Kuwait’s main market index rose 0.2 percent on Wednesday.

Many Kuwaiti family-owned businesses are considering floating some of their shares to join the country’s bourse, said Al Khannah.

“We wanted to be the first on the train,” he said. “After two years [since the last company listing], there’s a lot of excitement, there’s a lot of demand [and] enthusiasm for IPOs in Kuwait.”

Al Khannah became Beyout’s CEO in 2016. His father co-founded the company in 1991.

When asked why Beyout had gone public, Al Khannah said: “I want to protect the legacy of the company. I want to make sure that there is a proper transition of the business from one generation to the other. There is no better way [of doing this] than getting into Boursa Kuwait.”

In Beyout’s share sale prospectus, the company forecasts it will make an annual net profit of KWD 12.6 million in 2024, up from KWD9.6 million in 2023.

Its most important subsidiary is Kuwait Resources House, a human resources and logistics company with 500 employees that generates about 85 percent of group revenue serving various clients including defence contractors, oil and gas companies and telecom operators.

Last December, Beyout won a build-operate-transfer project from Kuwait’s government to construct a 250,000 square metre industrial zone in Al Mutla’a City. As part of the deal, Beyout will spend three years building the vast facility and then operate it for a further 30 years, Al Khannah explained.

Beyout will not sell any more of its shares for at least two years, said Al Khannah.

“Our business is sophisticated, so the market needs more time to understand [it],” he added. “We can create a lot of value by educating the market about our company, our role, our core business.”