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Dubai Investment Bank Arqaam Capital Plans Saudi Arabia Open

Feb. 5 (Bloomberg) -- Arqaam Capital Ltd., the Dubai-based investment bank expanding across the Middle East and Africa, said it plans to open in Saudi Arabia within the next year to take advantage of rising demand for assets in the region.

“Saudi Arabia is the region’s biggest market and no one can ignore that,” Chief Executive Officer Riad Meliti said in an interview yesterday in Dubai. “It’s something we’ve been looking at for a while and now’s the right time to do it.”

The bank is applying for a license to operate in the kingdom and hopes to start operations within 12 months, he said. Arqaam will start by offering brokerage services before expanding to a “full range of investment banking,” he said.

Arqaam is among regional and international banks seeking to expand or establish a presence in the country on expectation the Arab world’s largest bourse may open up to foreign investors. Morgan Stanley and Credit Suisse Group AG shifted regional equities bases to Riyadh from Dubai, while VTB Capital Plc may also set up an equities business in the Saudi capital.

“We’re seeing a shift in global allocations by fund managers attracted to growth rates in emerging markets,” Meliti said. Arqaam has about 700 global institutional clients and is adding 40 new clients every three months, he said.

The bank last month said it’s starting operations in South Africa and became the first stock broker to join the Johannesburg Stock Exchange in three years. Arqaam said it plans to cover 125 sub-Saharan stocks by the end of the year, up from 42 now, and is also expanding in Ghana, Kenya and Nigeria for investment and advisory work.

IPOS

Arqaam is also working on about 10 initial public offerings in the region after being approached by about 25 companies, Meliti said.

“We want to focus on about 10 that we like,” he said. “They’re a mixture of U.A.E. and Gulf companies that are looking to list locally or overseas.”

Gulf financial institutions are expanding as local markets rally, while Europe’s debt crisis prompts some larger rivals including Credit Suisse and Nomura Holdings Inc. to reduce staff. Abu Dhabi-based First Gulf Bank PJSC plans to hire 30 bankers for its wholesale business this year, Simon Penney, head of wholesale banking at the lender, said yesterday.

Arqaam bought El Rashad Securities Brokerage SAE in Cairo to expand in Egypt and also acquired Libya’s Al Rashad Finance and Management Advisory to build a base in north Africa.

The investment bank will pursue “organic” growth in Saudi Arabia, Meliti said. Saudi Arabia’s benchmark Tadawul All Share Index gained 2.7 percent so far this year after climbing 26 percent in 2013.

Saudi Arabia only allows non-resident foreigners outside the six-nation Gulf Cooperation Council to invest through equity swaps and exchange-traded funds and last year said it would only open the market on a gradual basis. The country last February replaced the head of its Capital Market Authority with Mohammad Al al-Sheikh, who represents Saudi Arabia at the World Bank.

To contact the reporters on this story: Stefania Bianchi in Dubai at sbianchi10@bloomberg.net; Sarmad Khan in Dubai at skhan170@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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