Direct listing on Nomu reduces time, cost for new entrants, says official

Direct listing, which has been recently introduced on Nomu Parallel Market, comes as part of the prominent measures and structural changes aimed at this market to boost liquidity and increase the number of listed companies on Nomu, Nayef Al-Athel, Director of Listing at the Saudi Stock Exchange (Tadawul) told Argaam in an exclusive.
 

Flexibility was the basic principle adopted when Nomu was launched, to attract more companies to the market under less stringent and easier criteria.
 

Direct listings reflect the new companies listed on Nomu without initial public offering (IPO). The direct listing reduces the normal offering process, which includes setting price range, book-building, crediting shares to investors’ portfolios, etc. Accordingly, the new method reduces time, cost and effort.
 

“There are no significant differences between direct and traditional listing. The companies wishing to list directly on Nomu are required to hire a financial advisor to complete the paperwork required by the Capital Market Authority and Tadawul,” Al-Athel said.
 

For liquidity, direct listing requires companies to be owned by no less than 50 shareholders, whose ownership is no less than 20%, or SAR 30 million of a company’s share capital, whichever is lower.
 

Companies with private placements are well placed for direct listing, the top official explained, noting that a large number of those companies have met the liquidity requirements.
 

Answering a question about direct listing costs, Al-Athel said that the costs of listing on Tadawul or Nomu is deemed the lowest as a percentage of the offering proceeds worldwide. Saudi White Cement Co. was the first direct listing on Nomu.  

“Going forward, we’ll reap the fruit of direct listings, their impact and costs. Direct listings are expected to have a low cost, compared to traditional offerings, as they fast track the normal IPO process,” Al-Athel affirmed.
 

Direct listing is an efficient means to raise additional finance channels. Accordingly, it helps support small-and-medium size enterprises in Saudi Arabia and accelerate their growth.
 

Tadawul is the first stock market that allows direct listing in the GCC region, he concluded.