KUWAIT - Finance
Vice-Chairman and CEO, Boursa Kuwait
Khaled Abdulrazzaq Al Khaled was initially assigned to his current role as CEO in 2014, with more than 20 years of experience in business law and regulatory matters and a strong focus on the commercial, investment, and real estate sectors in Kuwait. He is also Chairman of the Board’s Corporate Governance Committee and the Chairman of the Board’s Executive Committee. He previously served on Kuwait’s Municipality Council and on the board of the Kuwait Chamber of Commerce and Industry. Prior to that, he was the Chairman of the Kuwait Pearl Institute for Model Education as well as the Vice-Chairman of the Kuwait Dairy Company (KDC). Al Khaled holds a law degree from Kuwait University and an LLM in international business law from the American University, Washington, DC.
The key event this year was our takeover of the management of the Kuwait Stock Exchange (KSE) on April 25, 2016. This was a huge milestone and a great leap forward in the privatization process. It was a very smooth handover, which did not hamper the operations of the exchange or trading activities in any way. The handover was unusual in that it was not a private sector-to-private sector handover but one from the public sector to the private sector. This normally requires a number of special actions and special considerations in order that such a transfer can be successful. In this case, a major step is making the stock exchange regionally and internationally competitive. We are doing this by restructuring the infrastructure of the stock exchange itself in three phases. We have successfully completed phase one, which primarily involved the setting up of Boursa Kuwait. Phase two entails the formulation and implementation of our initiatives and strategy roadmap, and is almost complete. Finally, phase three includes the assumption of full operations of the KSE and preparations for a company IPO in due course. However, we first need to ensure that the improvements continue to be on the right track, because none of our existing or potential stakeholders will be interested in entering the market if we are not conducting and maintaining the business to internationally recognized standards. We are not seeking to reinvent the wheel; we are adopting international benchmarks and best practice and are mainly targeting international institutional investors. We primarily focus on the trading processes, segmenting the market, enabling more transparency and efficiency in the market, and introducing a proper cycle of settlements. We are applying this methodology so that the market will be familiar to international investors in terms of infrastructure and business approach.
Our process was started and made clear long before the new Saudi plan, but our cycle of implementation is taking a little bit longer because of the current law and the need to approve new laws by parliament. This is one of our weaknesses and as a result our actions cannot yet be translated as fast as we would like them to be. Although our main priority is to finalize the KSE’s infrastructure at this time, we currently have 203 companies listed and the day-to-day business must continue. We are the only established stock exchange on the market, so the privatization process is not just about convincing people to list on the market, or assisting the government privatization process by helping it list its own entities on the market. The stock exchange itself is leading the process on this issue. The KSE is at the forefront of the government’s privatization initiatives. Once governmental entities are transferred to the private sector, they will be listed on the stock exchange. Our aim is to have government companies, mainly in the oil sector, list on the KSE. This is also part of the government’s strategy. But the concept of the privatization process is not just about opening government entities to the public, it is also to convince family-owned companies to consider an IPO. However, we need to give them confidence and persuade them that the stock exchange is one of the most effective methods for companies to raise capital. To do this successfully we need to change the business culture and the closed nature of private family-owned companies.. We need to showcase the benefits of going public, and that an IPO will only benefit the company, not the opposite. We have had some success in this in the recent past, with a very successful example IPO with Mezzan Holding.
By September 30, 2016, we anticipate being a fully licensed independent stock exchange with the full support and endorsements of the Capital Markets Authority (CMA). On the ground, we are making good progress in enhancing our services and systems and this date will not affect the upgrades we have underway and which we plan to have in place by the end of the year. If all continues to go to plan I think 2017 is going to be our breakthrough year. If the CMA accepts all of our plans, we are going to have a new kind of stock exchange with new markets introduced and systems that embrace international best practice. We are going to have a market maker introduced by the end of this year, and will introduce SLBs and short selling. We will also collaborate with the KCC to introduce derivatives and options. In addition, we are going to enhance over-the-counter performance, which is a market nobody focuses on in the region, and later, we are going to focus on SMEs, which are a key part of the economy, especially in relation to diversification. Kuwait is the most innovative country in the region. While other countries are focusing on conglomerates and big businesses, in Kuwait we concentrate far more on entrepreneurship and encouraging business growth. There are conglomerates here, but much of their success is based on collaboration with small businesses.
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