VTB Capital plc has launched for the first time USD denominated Participatory Notes (P-Notes) – an innovative new product offered to international clients exposed to the Saudi Arabian equity market. This is an important step in expanding the company's business in the MENA region.
The benefit and the competitive advantage of VTB Capital’s programme is that for the first time, international investors will be given access to the Saudi equity market without bearing the exposure to a bank sponsor. This is especially relevant following the significant change in credit quality of the global investment banks that we saw in the last few years.
Saudi Arabian market is the largest and most liquid stock exchange in the MENA region. VTB Capital's new product provides recourse to the underlying shares via an independent security trustee that is an important distinction from rival products.
VTB Capital has made a major push to expand its cash equity offering beyond Russia and the CIS and into other emerging markets. The company is committed to trading on behalf of its clients in the MENA region and in Turkey, and it will also be expanding this product offering into Africa.
Alexei Yakovitsky, Global CEO at VTB Capital, noted: "The business development in the MENA region is a strategic part of VTB Capital’s international expansion. The Saudi market is home to a number of attractive companies across a range of sectors, and I am confident that the innovative structure of VTB Capital’s new product will appeal to a wide range of investors. I’m sure that among the few Russian companies operating on Saudi Arabian market, VTB Capital is one of the most prominent and our innovative product will be well received by the clients."
Makram Abboud, CEO Middle East & Africa for VTB Capital plc, said: “The liquidity of the Saudi market compares well to major emerging market peers. Foreign institutional trading averages less than 2% which is relatively low. This is a function of the lack of access rather than a reflection on the quality of the listed companies or their liquidity and it points to an immense opportunity for future growth. I am confident that this new access product will be in high demand among our international investors.”
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