Retal Urban Development Company announcement of intention to float on the Saudi Stock Exchange

Khobar, KSA: Retal Urban Development Company (“Retal” or “the Company”), a next generation real estate development company announces its intention to proceed with an Initial Public Offering (“IPO” or “Offering”) and list its shares on the Main Market of the Saudi Stock Exchange (“Saudi Exchange”).

The Capital Market Authority (“CMA”) on 16 May 2022G approved the Company’s application for the Initial Public Offering of 12,000,000 ordinary shares, representing 30{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} of the Company’s share capital. The final price at which all subscribers in the Offering will purchase will be determined at the end of the book-building period.

BUSINESS HIGHLIGHTS

• Retal is a next generation real estate developer of integrated master plan communities offering a full portfolio of lifestyle-oriented residential, commercial, and mixed-use properties and a pioneer in implementing off-plan sales model.
• In addition to the development of residential communities, Retal also develops a wide range of commercial and mixed-use projects as well as office buildings.
• Since Retal’s inception in 2012G, the Company has played a key role in the development of the Kingdom’s real estate market and supplying it with modern concepts and designs that cater to the needs of its customers and meet the expectations of all stakeholders in terms of profitability, design and appropriate pricing, as well as the sustainability of buildings in both maintenance and operation.
• Retal is a pioneer in launching off-plan projects, which has become a key component of Saudi’s efforts to ensure the quality of projects throughout the construction and delivery phase, offering customers the ability to select their units based on their personal preferences. This also ensures high levels of transparency and communication with customers from the day of booking the unit until its successful handover.
• Retal focuses on developing projects in strategic locations that meet the lifestyle aspirations of Saudis. Strategically focused on premier locations in Saudi Arabia, which has strong economic and favorable demographics long-term.
  • Saudi’s growing population and rapidly shifting demographics, boasting one of the highest youth populations in the world has created a huge market of people with disposable income for new properties.
  • Vision 2030 initiatives and government spending on the residential, entertainment and tourism sectors are driving demand for real estate.
  • The housing market is witnessing an increase in public-private partnerships (PPPs) as part of the government’s plan to attract more private sector investment in the sector.
  • Meanwhile, the government is making huge investments in new housing projects across the Kingdom in order to meet accumulated, pent-up demand.
• Retal has successfully built a full-service integrated platform.
  • We deliver solutions beyond construction.
  • We fully own four business units that enable it to ensure quality control across the full supply chain, from concept development, design, and construction to sales.
  • These are: Nesaj (Project Management), BCC (Contracting), Tadbeir (Facility Management) and TRS (Property Management).
  • This integration allows Retal to have full control over quality while minimizing operational cost.
• Retal’s core business focuses on the development of residential communities comprising villas, townhouses and apartments catered to a diverse variety of customer types from affordable, mid- and luxury market segments.
  • The Company has developed a number of the Kingdom’s most prestigious and exciting communities, including Nesaj Town Dammam 1 and 2, Nesaj Town AlKhobar and Retal Residence. It has also developed a number of residential communities under the ‘Ewan’ brand, including Ewan Al Nahda, Ewan Al Nawras and Ewan Al Maali, and launched the high-end villa project, Ayala, with its new concept and digital pre-customization, which allows customers to choose and add the details to their liking and make modifications to designs and spaces prior to purchase. These projects are complemented by lifestyle-oriented recreational amenities such as parks, water features, and other outdoor spaces. Additionally, Retal has projects in the hospitality sector, such Nobo which is part of Retal Rise luxury residential tower, and other sectors such as Retal Business Center – Riyadh, which offers modern and luxury office spaces that cater to the new workplace environment. The Company is also developing Ewan Sidra, the first residential project to be developed with ROSHN (a PIF owned company).
  • As of 30 September 2021G, Retal’s portfolio comprises over 30 completed and ongoing projects with a total of over 7,000 units, of which about 2,957 units were completed by 30 June 2021 in Riyadh, Jeddah and the Eastern Province in Saudi Arabia.
  • Retal also develops mixed-use projects incorporating residential, retail, and hospitality components and oversees all aspects of the integrated lifestyle master plan community’s development, from its initial concept development, design and construction to its sales and marketing, and supported by the off-plan sales model.
• Industry leading return on equity, with superior earnings and strong balance sheet.
  • Demonstrated consistent revenue growth, high net profit margins and solid cash flow generation.
  • Between 2018G and 2020G, annual revenue grew by 181{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} from SAR 209 million in 2018G to SAR 587 million in 2020G and net income jumped from SAR 3 million to SAR 99 million from 2018G to 2020G. Net income for the nine-month period ended 30 September 2021G was up to SAR 120 million.
• An engaged and experienced leadership team, with a strong track record in real estate development and management.

Abdullah bin Abdullatif bin Ahmed Al-Fozan, Chairman of the Board of Directors, Retal Development Co.:

“I am delighted to announce our intention to list on the Saudi Exchange through an IPO. This marks a significant milestone in the growth trajectory of our business and a key step towards further solidifying our leading position in the Saudi real estate sector. Our potential listing comes at an exceptionally exciting time as we continue to make remarkable strides towards opening up to the world, creating new opportunities, and elevating the lifestyle of every Saudi family as part of the Vision 2030.”

Eng. Abdullah bin Faisal bin Abdulaziz Al-Braikan, Chief Executive Officer of Retal Development Co.:

“Retal has grown to become one of the most trusted developers of iconic master-planned communities that shape the urban fabric of Saudi. Opening the business to public investors will consummate the process of growth we have undertaken in the last ten years.”

“We are already witnessing a huge demand for high quality developments in desirable destinations across the country. We anticipate this demand to continue, driven by strong economic trends, favorable long-term demographics, and Saudi’s commitment to transform the real estate landscape and improve the standard of living in the country through the development of real estate laws and regulations. With Retal’s robust strategy, expertise, and financial strength, we are poised to capture these exciting opportunities while delivering excellent value to our shareholders.”

Where we are: Key Investment Highlights

• IPO represents the next stage of Retal’s maturity, further propelling Retal’s position to fully take advantage of the expected sector growth arising from long-term demographic trends and large-scale government initiatives including:
  • Saudi’s growing population and rapidly shifting demographics, boasting one of the highest youth populations in the world creates a huge market of people with disposable income for new properties.
  • Saudi government’s plans to increase homeownership to 70{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} by 2030G will support demand for residential projects. The growing availability of home financing is also expected to further drive this demand.
  • Regulatory policies, large-scale housing schemes, and other pro-growth initiatives are set to support the mortgage market and Saudi nationals home ownership.
  • There is a huge demand/supply gap offering Retal with an opportunity to exploit and grow further. Demand for housing in Saudi is due to reach 4 million units by 2030G with a demand gap of 2 million units.

Provide customers, partners, and people with a full-service integrated platform. We deliver solutions beyond construction

• Retal is made up of 4 business units that enable it to ensure quality control across the full supply chain. These include:.
  • Nesaj Urban Development Company: specialized in construction project management.
  • Building Construction Company (BCC): engages in general construction of residential buildings, general construction of non-residential buildings (including schools, hospitals, hotels, etc.), general construction of government buildings, electrical wiring, communication wiring, and building finishing. BCC only works on projects being developed by Retal.
  • Tadbeir (facilities management): engages in building finishing and cleaning post-construction new buildings.
  • Tadbeir Real Estate (TRS) (property management): engages in buying, selling and subdividing land and real estate, off-plan sales activities, management and leasing of owned or leased properties (residential), management and leasing of owned or leased properties (non-residential), real estate brokerage (brokers’ offices), real estate management activities for a commission, and sale of fixed and movable assets.

Next generation real estate developer with a scalable business model configured to enable transformative growth and flexibility.

• Pioneer in implementing off-plan sales model capitalizing on a solid operating platform, backed by strategic partnerships and unique local expertise.
• Retal offers a portfolio mix of residential, commercial, and recreational amenities capturing a wide audience across the affordable, mid-market and high-end market segments.
• Off-plan sales model ensures that Retal is responding to market demand with low capital requirements, creating resilient capacity to paying dividends. It also enables the Company to complete construction in phases with a focus on delivering high-quality design, flexible planning, and development to deliver customized offerings that meet market needs. This reflects positively on the Company’s business fundamentals in terms of project financing, investment schedule, inventory management and project returns. In 2020G, Retal sold 2,010 units, of which 65{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} was sold off-plan. As of the nine-month period 2021G, off-plan sales make up 91{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} of revenues.

Proven track record of delivering quality and desirable communities in Saudi Arabia

• As a leader in the field of off-plan sales, Retal has a strong track record of delivering quality, excellence, and value through all stages of the master plan community development.
  • The Company has over 7,000 units developed and under execution since its inception. It has built iconic master planned communities such as Nesaj Town, Ewan, Ayala, and Marasi Al-Khobar.
  • It predominantly focuses on highly integrated residential communities with innovative designs, premium quality, and full access to amenities.
• Retal is recognized by some of the most highly regarded organizations in the region, including the Saudi Ministry of Municipal, Rural Affairs and Housing (MoMRAH) which named Retal as the “Best Real Estate Developer in the Kingdom” for two consecutive years ( 2019G and 2020G).

Highly attractive financial profile with robust earnings, industry-leading margins, and strong balance sheet

Source: Audited financial statements for the year ended 31 December 2020G

• Sustained growth momentum with revenue reaching SAR 587 million in 2020G, representing a CAGR of 68{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} during 2018G – 2020G.
  • Revenue increased 91{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} to SAR 613 million in the nine-month period 2021G driven by revenue from construction and development contracts and revenue generated from Nesaj Town 2.
• High profitability with net profit reaching SAR 99 million in 2020G, representing a CAGR of 500{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} during 2018G – 2020G.
  • Net profit rose 179{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} to SAR 120 million in the nine-month period 2021G, compared to the same period in 2020G.
• Double-digit gross profit margins of 15{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}, 17{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}, 21{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}, and 24{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} in 2018G, 2019G, 2020G, and 9M 2021G respectively.
• Continuous growth in net profit margins of 1{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}, 13{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}, 17{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}, 20{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} in the same corresponding periods.
• High quality return on equity (ROE) of 2{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}, 25{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}, 23{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}, and 30{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} in 2018G, 2019G, 2020G, and 9M 2021G respectively.
• Growth on Return on Assets (ROA) of 0.6{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}, 10{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}, 11{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}, and 12{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} in the same corresponding periods.
• Balanced approach to business growth and providing optimal shareholder value. In 2019G and 2020G, Retal distributed more than 80{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} of its net income as dividends while executing on expansion initiatives.

Strategic partnerships to support market outreach and long-term growth prospects

• Retal is a trusted partner of the Ministry of Municipal and Rural Affairs and Housing in progressing its national housing program.
• In 2018G, Retal launched its first projects under the “Nesaj Town” brand, in partnership with the National Housing Company (NHC) and MoMRAH, to implement about 674 housing units. In 2021G, the Company also partnered with both entities to launch the Nesaj Town Al Narjes project in Riyadh.
• Other projects developed in partnership with MoMRAH include Nesaj Town Dammam to develop 1,653 residential villas, Nesaj Town Al-Khobar, and Ayala Al-Nakheel.
• In 2021G, Roshn, the national real estate developer for residential areas, selected Retal as its first sub-developer partner for the development of residential units within the first phase of SEDRA Community in Riyadh.

Highly qualified leadership with a strong track record in real estate development and management.

• Led by highly qualified senior management with extensive experience in the field of housing development and deep understanding of real estate in Saudi, including market trends and the competitive environment in the sector.
• Robust governance structure in line with Retal’s commitment to promoting sustainable long-term growth, financial stability and business integrity.
• Implements an integrated internal control system that includes a set of rigorous rules, policies, and procedures derived from CMA’s Corporate Governance Regulations and global governance best practice.

WHERE WE’RE GOING: Retal’s Strategic Direction

• Consolidate Retal’s leadership position in the field of off-plan sales.
• Expand market share and further diversify Retal’s customer base in Saudi.
• Sustain momentum in financial and operational growth and deliver optimal shareholder value.
• Strengthen Retal’s reputation as one of the preferred places to work with a strong focus on growing local talent.
• Achieve the sustainability of Retal and its sustainable relationships with the business and local communities as well as the real estate environment.

HOW DO WE GET THERE: Retal’s Strategic Priorities

• Continue delivering high quality development projects focused on key destinations in Saudi catering to a wide range of customers.
• Nurture and expand strategic partnerships with government and private entities.
• Enhance digital transformation to improve business efficiency, productivity and customer experience.
• Improve marketing channels to attract a diversified customer base.
• Implement transparent and rigorous governance policies to ensure alignment between the Company and its subsidiaries.
• Ensure adherence to high quality standards by implementing strict quality controls on all stages of development.
• Attract, develop and retain outstanding local talent.

HIGHLIGHTS OF THE OFFER

• Offering and listing on the Main Market of the Saudi Stock Exchange of Saudi Arabia – The Offering is comprised of 12,000,000 existing Shares to be sold by the current shareholders (the “Offer Shares”). With respect to the Offering, the Company appointed SNB Capital as the Sole Financial Advisor, Lead Manager, Bookrunner and Underwriter (“Bookrunner” or “Financial Advisor”).
• The Saudi National Bank (SNB), Riyad Bank and Albilad Bank have been appointed as receiving entities (collectively, the “Receiving Entities”). For the individual investors tranche.

The CMA and Saudi Exchange approvals have been obtained for the offering and listing outlined below:

The Offering will be restricted to the following two groups of investors:

• • Tranche (A): Participating Parties: this tranche comprises the parties entitled to participate in the book building process as specified under the Instructions for Book Building Process and Allocation Method in Initial Public Offerings (the “Book Building Instructions”) issued by the Capital Market Authority (“CMA”) Board pursuant to Resolution No. 2.94-2016 dated 15/10/1437H (corresponding to 20/07/2016G), as amended by CMA Board Resolution No. 3-102-2019 dated 18/01/1441H (corresponding to 17/09/2019G) (collectively the “Participating Parties”). The number of Offer Shares to be provisionally allocated to Participating Parties is twelve million (12,000,000) Offer Shares, representing 100{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} of the total Offer Shares. Final allocation of the Offer Shares will be made after the end of the subscription period for Individual Investors. In the event that Individual Investors (as defined in Tranche B below) subscribe for the Offer Shares allocated thereto, the Lead Manager shall have the right to reduce the number of shares allocated to Participating Parties to a minimum of ten million, eight hundred thousand (10,800,000) Offer Shares, representing 90{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} of the total Offer Shares.
  • Tranche (B): Individual Investors: this tranche comprises Saudi Arabian natural persons, including any Saudi female divorcee or widow with minor children from a marriage to a non-Saudi, who can subscribe under their names for her own benefit, on the condition that she proves that she is a divorcee or widow and the mother of her minor children, in addition to any non-Saudi natural person who is resident in the Kingdom or any GCC natural persons, provided they have a bank account with one of the Receiving Entities and are allowed to open an investment account(collectively, the “Individual Investors” and each an “Individual Investor,” and together with Participating Parties “Subscribers”). Subscription of a person in the name of his divorcee shall be deemed invalid, and if a transaction of this nature is proved to have occurred, the law shall be enforced against such person. If a duplicate subscription is made, the second subscription will be considered void and only the first subscription will be accepted. A maximum of one million, two hundred thousand (1,200,000) Offer Shares, representing 10{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} of the total Offer Shares, will be allocated to Individual Investors, provided that Participating Parties subscribe to all the Offer Shares allocated thereto. In the event that Individual Investors subscribe for all the Offer Shares allocated thereto, the Lead Manager shall have the right to reduce the number of shares allocated to Individual Investors in proportion to the number of Offer Shares subscribed for thereby.

-Ends-

ENQUIRIES
Sole Financial Advisor, Lead Manager, Bookrunner, and Underwriter
Zaid Ghoul
Managing Director, Head of Investment Banking
[email protected]
Media Enquiry
Brunswick Group
Jade Mamarbachi / Joudi Issa
[email protected]
Retal
Abdullah AlShuwayer
[email protected]

Disclaimer

The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed by any person for any purpose on the information contained in this announcement or its accuracy, fairness or completeness. The information in this announcement is subject to change. Neither the Company nor the Bookrunner or their respective affiliates undertake to provide the recipient of this announcement with any additional information, or to update this announcement or to correct any inaccuracies, and the distribution of this announcement shall not be deemed to be any form of commitment on the part of the Company or the Bookrunner to proceed with the Offering or any transaction or arrangement referred to therein. The contents of this announcement are not to be construed as legal, financial or tax advice.

The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement is not an offer for sale of securities of the Company, directly or indirectly, in or into the United States. The Offer Shares may not be offered or sold in the United States unless registered under the US Securities Act of 1933, as amended (the “Securities Act”), or offered in a transaction exempt from, or not subject to, the registration requirements of the Securities Act. The Company has not registered and does not intend to register any portion of the Offer Shares under the Securities Act or the laws of any state in the United States or to conduct a public offering of any securities in the United States. Copies of this announcement are not being, and may not be, distributed, forwarded or otherwise sent, directly or indirectly, in or into the United States.

This announcement does not contain or constitute an offer of, or the solicitation of an offer to buy, the Offer Shares to any person in the United States, Australia, Canada, South Africa or Japan or in any jurisdiction to whom or in which such offer or solicitation is unlawful. The offer and sale of the Offer Shares has not been and will not be registered under the applicable securities laws of Australia, Canada, South Africa or Japan. Subject to certain exceptions, the Offer Shares may not be offered or sold in Australia, Canada, South Africa or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada, South Africa or Japan. There will be no public offer of the Offer Shares in the United States, Australia, Canada, South Africa or Japan.

This announcement is being distributed in accordance with the Rules on the Offer of Securities and Continuing Obligations (“OSCO Rules”) issued by the CMA for the purposes of ascertaining the extent to which potential investors are willing to participate in the potential initial public offering of the Company, and should not result in any binding undertakings to acquire shares or subscribe in the Offering. This announcement is for information purposes only and under no circumstances shall constitute an offer or invitation, of form the basis for a decision, to invest in any securities of the Company. Neither this announcement nor anything contained herein shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction. Investors may only subscribe in the Offer Shares on the basis of the CMA approved Arabic language prospectus to be issued and published in due course (the “Prospectus”). The information in this announcement is subject to change. In accordance with Article 33(d) of the OSCO Rules, copies of the Prospectus will, following publication, be available on the websites of the Company at www.retal.com.sa, the Saudi Exchange at www.saudiexchange.sa, the CMA at www.cma.org.sa and of the Financial Advisor.

This announcement is not an offer document for the purposes of the OSCO Rules and should not be construed as such. The CMA and the Saudi Exchange do not take any responsibility for the contents of this announcement, do not make any representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this announcement.

This announcement may include statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms “aim”, “anticipate”, “believe”, “can”, “consider”, “could”, “estimate”, “expect”, “forecast”, “intend”, “may”, “ought to”, “potential”, “plan”, “projection”, “seek”, “should”, “will”, “would”, or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Any forward-looking statements reflect the Company’s current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company’s business, results of operations, financial position, liquidity, prospects, growth or strategies. Many factors could cause the actual results to differ materially from those expressed or implied by any such forward-looking statements, including, among other things, risks specifically related to the Company and its operations, the development of global economic and industry conditions, and the impact of economic, political and social developments in Saudi Arabia. These factors will be described in more detail in the Prospectus. Forward-looking statements speak only as of the date they are made. Each of the Company, the Bookrunner and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future developments or otherwise.

There is no guarantee that the Offering will occur and you should not base your financial decisions on the Company’s intentions in relation to the Offering at this stage. This announcement does not constitute a recommendation concerning the Offering. Acquiring Offer Shares to which this announcement relates may expose an investor to a significant risk of losing the entire amount invested. Persons considering investment should consult an investment advisor or an authorized person specializing in advising on such investments.

The Bookrunner is acting exclusively for the Company and no-one else in connection with the Offering. It will not regard any other person as their respective clients in relation to the Offering and will not be responsible to anyone other than the Company for providing the protections afforded to their clients, nor for providing advice in relation to the Offering, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

The contents of this announcement have been prepared by and are the sole responsibility of the Company. None of the Bookrunner or any of its affiliates or respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or its associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith.

In connection with the Offering, the Bookrunner and any of its affiliates, may take up a portion of the Offer Shares in connection with the Offering as a principal position and in that capacity may retain, purchase, sell, offer to sell for their own accounts such Offer Shares and other securities of the Company or related investments in connection with the Offering or otherwise. Accordingly, references in the Prospectus, to the Company’s shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, the Bookrunner and any of its affiliates acting in such capacity. In addition, the Bookrunner and any of its affiliates may enter into financing arrangements (including swaps or contracts for difference) with investors in connection with which the Bookrunner and any of their affiliates may from time to time acquire, hold or dispose of securities. The Bookrunner intends to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.