Title: Announcement Regarding the Bidding for an Equity Stake in Boursa Kuwait between 26% to 44%

Overview - Boursa Kuwait  
Pursuant to Article 33 of the Law No.7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and its Amendments (“CMA Law”), the Capital Markets Authority of Kuwait (“CMA”) announces the initiation of the bidding process for an equity stake in Boursa Kuwait that ranges between 26% to 44%. Article 33 of the CMA Law states that the shares are to be allocated to companies listed in the exchange in conjunction with an International Securities Exchange Operator, or an International Operator acting solely. 

Background of the CMA and Boursa Kuwait 

The Kuwaiti economy has undergone considerable growth and modernization over the last few years, resulting in its classification as a Secondary Emerging market by FTSE in September 2017. As part of the modernization of the Kuwaiti capital market, and pursuant to Article 33 of the CMA Law regarding the allocation of Boursa Kuwait capital shares, the first phase involved the CMA establishing the Boursa Kuwait Company K.S.C.P, (“Boursa Kuwait”), to replace the Kuwait Stock Exchange (“KSE”). On the 25th of April 2016, management of the KSE was transferred to Boursa Kuwait, and the exchange license transferred on the 3rd of October 2016 by granting the company a securities exchange license. 

Boursa Kuwait now has 176  listed companies across all industries with a market capitalization of KD 28.7 billion (95.4 BN USD)1, with the core service offering in the exchange focusing on cash equities, and plans to expand across a range of products and services. On the 1st of April 2018, Boursa Kuwait entered a new stage by segmenting the market into three: premier, main and auction markets, and implementing Boursa Kuwait’s new Rulebook. Each segment has been designed to provide the most suitable disclosure and listing requirements for each of their members.

Overview of the proposed bidding process for an equity stake in Boursa Kuwait 

Moving towards the bidding for an equity stake in Boursa Kuwait, the CMA aims to secure an investor(s) who have the right capabilities to help further develop and strengthen Boursa Kuwait to become a leading securities exchange in the region. 

Overview of the investment model

Article 33 of the CMA Law defines two potential investment models:

- Participate in a consortium that includes qualified companies listed in the exchange in conjunction with an qualified International Operator, or

- A qualified International Operator can decide to participate and bid on their own.

Shares will be awarded based on the highest bid above par value.

Qualification criteria for International Operators

The CMA invites International Operators to participate in the bidding process for an equity stake of Boursa Kuwait. 

The following qualification criteria must be met by the Operator to be considered an International Operator as per Article 33 of the CMA Law: 

1. The International Operator must be domiciled in a market classified as Secondary Emerging Market or higher by FTSE / Russell and Emerging Market or higher by MSCI.

• This criterion is based on the market classification as of the 31st of December 2017. Any change in the market classification after that date will not affect the International Operator’s qualification.

2. In addition to the above criteria, the International Operator should satisfy one of the below criterions:
- Have a minimum market capitalization of $200BN and a minimum of 300 listings on its exchange 
or; 
- Have annual group wide revenues for the year 2017 of over $200MM.

• This criterion is based on listings and market capitalization on the 31st of December 2017. Any change in the number of listing and / or total market capitalization and / or group wide revenues after that date will not affect the International Operator’s qualification.
 

Qualification criteria for Local Companies 

The CMA invites Local Companies to participate in the bidding process for an equity stake of Boursa Kuwait. 

The following qualification criteria must be met by the Local Companies: 
1. Must be a Kuwaiti listed company on Boursa Kuwait, incorporated and registered in the State of Kuwait;
• This criterion should be met on the date of Submission of Expression of Interest (“EOI”), date of Registration for the Auction and the date of the Auction. 

2. Must be listed on the Premier or Main market of Boursa Kuwait; 
• This criterion should be met on the date of submission of EOI. 

3. Must be a bank, investment company or finance company licensed by the CMA and / or registered with the Central Bank of Kuwait.
• This criterion should be met on the date of submission of EOI.

Call for Expression of Interest

The CMA official calls for Local Companies and International Operators that meet the qualification criteria to submit an EOI and the signed Non-Disclosure Agreement (“NDA”) by the set specified dates. 

Key milestones and timelines

The bidding process is officially launched today, Monday the  30th of April 2018. Below is an initial outline of the key milestones and high-level timelines:

• 21st of May 2018: Deadline for submission of EOI and NDA by Local Companies. 

• 24th of May 2018: letter to be sent by the CMA to qualified bidders who submitted the EOI and NDA to participate in the due diligence process and technical bidding phase. The Virtual Data Room (“VDR”) will be launched on this date

• 29th of June 2018: Deadline for submission of EOI and NDA by International Operators

• 20th of July 2018: Deadline for submission of technical bids by the International Operators 

Guidelines for entering the official bidding process

To officially participate in the bidding process, interested International Operators and Local Companies are required to submit the following:
• A soft copy via e-mail of the signed EOI, and the original hard copy to be submitted to the CMA address detailed below. 
• Two original hard copies of the NDA signed and submitted to the CMA address detailed below. 

For qualified International Operators, the EOI needs to include:

• Confirmation that the firm meets the qualification criteria of an international operator.

• Supporting document of the authorized signatory signing the EOI and NDA. 

• Designated contact person including name, address, email and phone number.

For qualified Local Companies, the EOI needs to include:

• A commercial registration certificate and Commercial License from the Ministry of Commerce and Industry in Kuwait together with its Memorandum of Association and Articles of Association (and all amendments thereto).

• Supporting document of the authorized signatory signing the EOI and NDA. 

• Designated contact person including name, address, email and phone number.

The required documents can be found on the CMA website: www.cma.gov.kw

Meeting with the qualified Local Companies

The CMA will hold a separate meeting for Local Companies to respond to questions raised by the qualified Local Companies. The CMA will reach out  to all qualified Local Companies to specify the meeting details. The goal of this meeting will be to answer potential questions raised by the Local Companies and provide additional background on the transaction.

CMA contact person

All documentation needs to be delivered to the CMA in both hard and soft copies according to the specificed dates to the below address:

Address: 
Dr. Faisal A. Al Fahad, 
Commissioner & Chairman of the Committee for Offering and 
Privatization of the Share Capital of Boursa Kuwait 
Capital Markets Authority
Kuwait,Sharq, Al-Shuhada Street, Al-Hamra Tower-24th Floor.
P.O. Box: 3913, Safat 13040, Kuwait City, Kuwait.
Email address: Transaction@cma.gov.kw

For questions and queries, bidders should contact the following email: Transaction@cma.gov.kw.