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Kuwait sovereign fund plans to sell $5.4b worth of company stake [Gulf News (United Arab Emirates)]
[October 23, 2014]

Kuwait sovereign fund plans to sell $5.4b worth of company stake [Gulf News (United Arab Emirates)]


(Gulf News (United Arab Emirates) Via Acquire Media NewsEdge) Dubai: The sovereign fund Kuwait Investment Authority (KIA) said it plans to sell its shares in three companies to the public, including its stake in Kuwait Investment Company through an Initial Public Offering (IPO) in the first half of 2015.



The stake is worth $5.4 billion (Dh19.8 billion), according to Bloomberg. The KIA has a total of $410 billion in assets, making it the sixth richest sovereign fund in the world, according to Sovereign Wealth Funds.

The wealth fund began offering stakes in listed Kuwaiti firms to the public in the 1990s as part of efforts to transfer more of the country's corporate wealth into private hands.


"Investor sentiment has improved a lot in Mena over the last few years despite the recent drop in oil prices and outlook in Kuwait has been improving and even the valuations are reasonably attractive, so by that way they can realise healthy capital gains in these companies. The KIA might be looking to diversify its investments internationally as Kuwait is a small market, even though it represents a large chunk of the frontier market index" said Jaap Meijer, managing director at Arqaam Capital.

KIA owns 76 per cent in Kuwait Investment Company. The sovereign fund also plans to sell its stake in Kuwait Finance House and telecommunications company Zain Group at a later time, state news agency Kuna quoted KIA as saying.

"It affirmed that KIA will take into consideration markets' circumstances in order to guarantee attainment of public benefit when IPO is offered," the statement said.

Dependence KIA has 24.1 per cent stake in Kuwait Finance House and a 24.6 per cent stake in Zain Group. KIA will reinvest the proceeds from IPOs through new investment tools and funds.

The KIA was started by Shaikh Abdullah Al Salem Al Sabah, the ruler of Kuwait from 1950-65, who decided to use a portion of its oil revenues for a savings fund and reduce its dependence on the single non-renewable resource.

Shares suspended: The Kuwait Stock Exchange (KSE) said it has cancelled all trades in Zain Group and Kuwait Investment Company for Thursday. The KSE said it has asked the KIA for further details and will resume trading in shares on Sunday.

"The KSE might ask for more details of their divestment plans, as to how much they want to dispose off, and the timeframe," Meijer said.

Shares in Kuwait Investment Company jumped 7.6 per cent to 142 fills earlier till mid-morning. Zain Group rose more than a per cent to be at 650 fils.

The KSE had suspended trading in Kuwait Finance House pending its quarterly results.

The Kuwait Stock Exchange, which bucked the negative trend in the Gulf region, ended 0.48 per cent higher. The index has gained nearly 2 per cent so far in the year.

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