Riyad Bank Greenlights IPO Preparation for Riyad Capital

Riyad Bank, a prominent financial institution in Saudi Arabia, has recently given the green light for the evaluation and groundwork of an initial public offering (IPO) for its investment banking arm, Riyad Capital.

In a statement released by Tadawul, the Saudi Exchange, it was revealed that the board of directors is actively contemplating listing Riyad Capital on the main market. This strategic move underlines Riyad Bank’s commitment to unlocking the potential of its subsidiary in the public domain.

The financial institution emphasised that Riyad Bank and Riyad Capital will collaborate closely to conclude the assessment, determining critical factors such as the offering size and other pertinent details. Regulatory approvals will be sought should Riyad Bank opt to proceed with the IPO, ensuring compliance with governing authorities.

As developments unfold, Riyad Bank pledges to provide timely updates in adherence to regulatory frameworks. Established in 2008, Riyad Capital boasts a diverse portfolio offering asset management, wealth management, investment banking, and brokerage services.

Leveraging its affiliation with Riyad Bank, one of Saudi Arabia’s largest financial entities, Riyad Capital stands to benefit from extensive industry expertise and a robust financial foundation. This synergy allows for a seamless integration of knowledge and resources, augmenting Riyad Capital’s market presence and capabilities.

Earlier initiatives, such as the collaboration with Saudi real estate firm Al-Ramz to launch the Durrat King Khalid Fund, underscore Riyad Capital’s commitment to pioneering projects within the Kingdom’s dynamic economic landscape. This venture aims to spearhead development within the office property sector, tapping into prime locations in Riyadh, covering a substantial area of 27,000 square meters.

Riyad Bank’s notable financial performance further substantiates its position as a market leader. Despite experiencing a marginal dip in net profit for the fourth quarter of 2023, the bank reported a significant surge in net profit for the fiscal year, reaching SR8.05 billion ($2.15 billion), marking a 15 per cent increase compared to the previous year.

Operating income also witnessed a commendable uptick, climbing by 17 per cent year-on-year to SR15.89 billion in 2023, primarily driven by escalated net special commission and other operating income streams. Riyad Bank’s resilience amidst market fluctuations underscores its robust operational framework and strategic resilience.

A recent report by KAMCO Invest highlighted Saudi Arabia’s burgeoning stature in the Gulf Cooperation Council region’s IPO landscape, with 35 out of 46 listings occurring within the Kingdom. Notably, the Saudi parallel market, Nomu, witnessed 27 IPOs in 2023, while the Tadawul All Share Index featured eight deals, showcasing Saudi Arabia’s attractiveness as an investment destination.

As Riyad Bank charts the course for Riyad Capital’s IPO journey, market observers keenly anticipate the unfolding narrative, underscoring the pivotal role of financial innovation in driving Saudi Arabia’s economic growth trajectory.