Riyad Bank Considers IPO for Investment Arm, Riyad Capital

Riyad Bank, a prominent financial institution in Saudi Arabia, is contemplating a significant move that could shake up the investment landscape in the region.

The bank is mulling over an initial public offering (IPO) of its investment banking arm, Riyad Capital, on the main market of the Saudi stock exchange.

This development comes amidst a notable uptick in listings across the Gulf Cooperation Council (GCC) region, driven by robust investor demand.

In an announcement made on Wednesday, Riyad Bank revealed that its board had passed a resolution to initiate the evaluation and groundwork for a potential IPO of Riyad Capital.

The bank, which trades its shares on the Saudi stock exchange Tadawul, disclosed this information in a filing to the bourse.

Riyad Bank stated that it would collaborate closely with Riyad Capital in the IPO process, with a focus on determining crucial aspects such as the size, structure, and other pertinent details of the offering.

However, it emphasized that any decision to proceed with the IPO would be contingent upon obtaining the requisite regulatory approvals.

With backing from the Public Investment Fund holding a 21.75 percent stake and the Saudi government owning 10.39 percent of the lender, Riyad Bank stands as a significant player in the Saudi financial sector.

The bank's robust financial performance, including a reported profit of 8 billion riyals ($2.1 billion) in 2023—a 15 percent increase year-on-year—underscore its appeal to investors.

The IPO deliberations by Riyad Bank align with a broader trend of heightened IPO activity in the region's largest economy.

Companies are increasingly turning to public markets to raise capital, buoyed by burgeoning investor interest and a favorable economic backdrop.

This surge in IPO momentum reflects a strategic move by firms to access additional funds, fuel expansion plans, and capitalize on growing market opportunities.

Source: Fareed Rahman / The National