Saudi Arabia's Derayah Financial confirms IPO, plans to float 20%
In 2024, Saudi Tadawul was hyper active with IPOs - and there are more coming
Dubai: Another IPO is coming up in Saudi Arabia – the Derayah Financial Company will be offering 20% through the stock float. Pricing will be decided after the book-building process.
It also sets up the Saudi Tadawul for what could be another bountiful year for IPOs.
A digital investment platform, Derayah was launched in 2009 and provides brokerage, asset and wealth management solutions. Client accounts have expanded 12-fold since 2016.
"As the Kingdom’s financial sector undergoes significant transformation with both regional and global capital markets continuing to offer compelling growth opportunities, Derayah is uniquely positioned," said Taha Alkuwaiz, co-founder and Chairman of Derayah.
Online based trading and wealth management platforms have become popular with the Gulf's retail investors. But it's been rare to see those platforms make the transition to being publicly traded entities on their own.
Catching investors young
As of H1-24, 72% of Derayah’s client accounts were investors 40 years old or younger, ‘implying its resonance with the younger digitally-savvy segment’. The working age proportion of Saudi Arabia's population is 58% compared to the 49% global average and expected to grow 2% compared to the global average of 0.9% between 2023 and 2029.
How the numbers stack up for Derayah
Its assets under management are at SR15.1 billion as of June 30, 2024, which came from a growth of 50% from end 2023. Of these assets, 65% were in public markets and 35% in private markets as of 30 June 2024G.
The total operating income for 2023 was SR624 million, which in turn generated SR330 million of net income. The company reported a 53% net profit margin for that year.
This is a company that’s ‘cash-rich, debt-free’ and with a ‘capital-light balance-sheet’.
"In recent years, we have achieved exponential growth by capitalizing on favorable local, regional, and global capital markets," said Mohammed Alshammasi, CEO of Derayah.
"We have done this by successfully catering to the needs of digital natives while simplifying the investment journey and providing a unique experience for a new generation of investors."
According to Kamco Invest, there were 42 IPOs in Saudi Arabia in 2024. Of these, 14 were on the Main Market while the remaining 28 came up in the Nomu parallel market.
Overall, these companies raised SR15.3 billion via the IPOs. The bulk of the funds raised went to the Main Market stocks, at SR14.2 billion, while companies in the Nomu raised SR1.1 billion.
"2024 witnessed 42 IPOs on Saudi Exchange, the highest annual number, as compared to 35 IPOs in 2023 and 36 IPOs in 2022.," said Junaid Ansari, Director of Investment Strategy and Research at Kamco Invest.
Lock-in period
On listing, at least 60% of Derayah's shares shall be subject to a lock-up period of 24 months. All of the ‘substantial’ shareholders, as well as those holding more than 3% of the company's share capital, directors, and senior executives who hold shares will be subject to this lock-up period. New shareholders will not be subject to the lock-up period.
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