Al-Riyadh Newspaper: Musharaka Capital Company begins offering its initial public offering fund
14 October 2014
The CEO of Musharaka Capital, Mr. Ibrahim bin Fahd Al-Assaf, stated that the Musharaka Initial Public Offerings (IPO) Fund is an open-ended investment fund designed to grow capital through investments in IPOs on the Saudi stock market, as well as stocks that have been listed for less than three years and comply with Shariah standards. The fund also aims to outperform its benchmark index (the Musharaka IPO Index, calculated by Standard & Poor’s), whose performance will be published on the fund manager’s website, Musharaka Capital.
Al-Assaf further emphasized the importance of building investor confidence in the Saudi financial market through investment in this fund, which is managed by a highly professional and specialized entity. This, in turn, significantly reduces risks for investors and enables them to benefit from fundamental and technical analyses conducted by fund managers when selecting investment directions. He highlighted that such funds have historically delivered attractive returns compared to the general market index.
Al-Assaf also mentioned that Musharaka Capital actively monitors local and global investment opportunities. The decision to establish this investment fund aligns with the company’s vision of maximizing benefits for its diverse clientele, including individuals and institutions. He pointed out that there is a growing market need for experienced financial and investment firms that can fairly assess stock prices during the book-building phase of newly listed companies. This has created a favorable opportunity for such entities to participate in IPO investments, benefiting from high allocation percentages, which in some cases have reached 90% of the institutional subscription tranche. This is expected to positively impact the performance of the fund’s units and investor returns.
Al-Assaf highlighted the timing of the fund launch, noting that the Musharaka IPO Fund aims to capitalize on the expected growth in the number of companies planning IPOs in the Saudi stock market. This growth is driven by positive market trends, such as the stock index reaching record levels. The fund will also focus on companies listed in the past three years, currently totaling 19 companies, as well as undervalued firms and those in the early stages of their economic cycles. These companies are expected to experience revenue growth, which will likely translate into higher stock prices and improved fund performance.
According to Faisal Al-Firdous, Investment Funds Manager at Musharaka Capital, the initial price per unit of the fund is 10 Saudi riyals, with a minimum subscription requirement of 10,000 SAR for individuals and 50,000 SAR for institutions. Investors will be able to buy and redeem fund units after the launch, based on a unit price evaluated twice weekly. The fund manager will adopt an active management strategy, focusing on adjusting investment positions as needed. Companies will be evaluated using quantitative and qualitative analyses, considering stock movements after listing, financial indicators compared to sector and market benchmarks, and historical behavior of newly listed stocks. The portfolio will be constructed based on these assessments, with investment weightings regularly reviewed to ensure compliance with investment limits and the fund’s core strategy.
As the fund manager, Musharaka Capital aims to leverage all its resources, including its highly skilled team and advanced investment management systems, while adhering to professional standards and regulatory guidelines set by the Capital Market Authority (CMA) to achieve its clients’ investment goals.
Musharaka Capital is a closed joint-stock company licensed by the Capital Market Authority to operate as a principal dealer, manage investment funds, and provide custodial and advisory services in the securities market. Headquartered in Al Khobar, Saudi Arabia, the company is backed by a distinguished group of businesses and investors with extensive experience. Specializing in investment fund management, Musharaka Capital enhances local investment services by offering innovative investment products tailored to diverse client objectives.
Notably, Musharaka Capital also manages real estate funds, with a strong focus on the real estate sector, recognizing its significant growth potential. The company believes that the entry of financial firms into the real estate market through innovative investment products is a key driver in organizing and developing the Saudi real estate sector. Musharaka Capital aims to be the optimal investment channel, providing easy access to high-value real estate opportunities for both individuals and institutions. Investors can participate in large-scale real estate projects with attractive returns, benefiting from a seamless and highly transparent process. Moreover, investors will be able to track their investments with a single click via the company’s website or mobile app.