The development of Saudi Arabia's secondary markets continued to bear fruit on Wednesday as fund manager Impact46 exited Rasan Information Technology Company in a SR917.5m (US$244.6m) accelerated offer.

The offer comprised nearly 13.3m shares, representing 17.2% of the company, with 9.9m shares from Venture Capital InsurTech Fund and 3.4m from Impact Growth Fund. The total offer represents around 17 days’ trading.

The two funds are both managed by Impact46 and acquired a combined 25.1% stake in 2021 in an SR88m funding round.

Books were covered within 15 minutes of opening on Wednesday and shortly before 3pm in London investors were guided to SR69, with books multiple times subscribed at that level ahead of books closing at 3:15pm.

Shares priced in line with guidance for a 4% discount to close of SR71.90, the tightest discount on a Saudi ABB so far.

There was strong interest from domestic and international investors.

Secondary offers have increased in the UAE and Saudi Arabia in recent years and have provided a good opportunity for international accounts to enter registers, having often had difficulty securing allocations in IPOs.

The structure of accelerated deals has also favoured international accounts that are more used to operating at speed compared to a regional investor base with a larger array of sovereign wealth funds, family offices and high-net-worth individuals, but bankers in the region say local institutions are becoming increasingly comfortable with the product.

“When ABBs were first introduced to the kingdom in 2017, the domestic market was not familiar with the product so international investors dominated," said Mohammed Fannouch, co-head of investment banking at HSBC Saudi Arabia. “We are now seeing the evolution and increasing maturity of the capital markets in Saudi Arabia with a healthy balance between KSA and international investors engaged on recent KSA blocks.”

Shares closed up 9.9% at SR79 on Thursday.

Shares hit highs of SR94.10 earlier in the year and remain well above IPO pricing of SR37.

“We expect a further pipeline in these secondaries following significant IPO activity,” said Fannouch. “A shareholder monetising its stake a year after IPO would have been perceived negatively in Saudi markets a few years ago, but the aftermarket performance shows that the market has matured a lot to realise that these events can be positive.”

Source: IFR