A NEW HORIZON

Kuwait 2017 | FINANCE | INTERVIEW

TBY talks to Khaled Abdulrazzaq Al Khaled, Vice-Chairman and CEO of Boursa Kuwait Company, on the takeover of the Kuwait Stock Exchange and the role the bourse plays in both the privatization of government entities and as a source of capital for family businesses.

Khaled Abdulrazzaq Al Khaled
BIOGRAPHY
Khaled Abdulrazzaq Al Khaled was initially appointed to his current role as CEO in 2014. 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.

What events have characterized the past year for Boursa Kuwait?

The key event was our takeover of the management of the Kuwait Stock Exchange (KSE) in April 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. We have successfully completed Phase I, which primarily involved the setting up of Boursa Kuwait. Phase II entails the formulation and implementation of our initiatives and strategy roadmap, and is almost complete. Finally, Phase III 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.

To what extent would you say your privatization process aligns with the goals of Saudi Arabia?

Our process was stated 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. Although our main priority is to finalize the KSE's infrastructure, we currently have 203 companies listed and the day-to-day business must continue. We are the only established stock exchange in 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. 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. We need to showcase the benefits of going public, and that an IPO will only benefit the company, not the opposite.

How would you describe your outlook for 2017?

We anticipate being a fully licensed independent stock exchange with the full support and endorsement 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. If all continues to plan 2017 is going to be our breakthrough year. If the CMA accepts all of our plans, we will have a new kind of stock exchange with new markets and systems that embrace best international practice. We are going to have a market maker introduced by the end of this year, and will introduce securities, lending, and borrowing (SLBs) and short selling. 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 and while other countries are focusing on conglomerates and big businesses, in Kuwait we concentrate far more on entrepreneurship and encouraging business growth.