At least two Kuwaiti firms plan rights issues worth a total of more than KD300m ($1bn) as they shore up their balance sheets, according to senior executives at UK bank HSBC.
HSBC is advising the firms on the best way to sell new equity stakes worth about KD150m each, according to Lloyd Maddock, chief executive officer at HSBC Kuwait. Maddock declines to identify the companies in question.
The plan is part of a growing trend in the emirate, after local bank Bouyban’s successful KD58.3m rights issue earlier in 2010.
Most equity stakes sold will likely end up among existing shareholders, as happened with Bouyban, adds Maddock.
“Quite a lot of companies in Kuwait are looking at rights issues,” he says. “A lot of companies here have large shareholder blocks on a family model and they don’t want to get diluted so they tend to subscribe to these offerings.”
The plans reflect a wider sense of confidence in Kuwait’s economy in recent months which may also lead to local companies raising equity through initial public offerings (IPOs), according to Maddock.
“There are some good companies here in Kuwait that are considering IPOs although it is not clear that they will decide to list locally,” he says.