Saudi Arabia is poised for a robust year in initial public offerings (IPOs), with over 50 expected and 35 already completed. Mohammed Al-Rumaih, CEO of Saudi Exchange, disclosed this at the EFG Hermes annual investor conference.
Saudi IPO Market Overview
Saudi Arabia leads the MENA region in IPO activity, raising $724 million from nine listings in Q1 2024. Notable IPOs include Modern Mills ($314 million), MBC Group ($222 million), and Middle East Pharmaceutical Industries Company ($131 million). Additional IPOs are anticipated across various sectors like healthcare and media.
Despite geopolitical challenges, IPO activity remains strong, with 25 private companies and 10 funds planning to list in 2024. Saudi Arabia tops the list with 21 announced IPOs.
Regulation and Oversight
The Capital Market Authority (CMA) regulates the Saudi IPO market, ensuring investor protection and market transparency. Established in the 1950s, the CMA operates autonomously and aims to foster a conducive investment environment.
Key responsibilities of the CMA include:
- Regulating the financial industry and promoting fair practices
- Protecting investors from fraud and manipulation
- Ensuring market efficiency and transparency
- Developing policies to mitigate securities transaction risks
Saudi Stock Exchange (Tadawul)
Tadawul has grown rapidly, becoming the 10th largest exchange globally with a market capitalization of SAR11 trillion as of June 2023. This growth is part of Saudi Arabia’s Vision 2030 to diversify its economy. International investor ownership increased from SAR198 billion in 2019 to SAR376 billion in 2023.
Despite global economic uncertainties, Saudi capital markets raised SAR50.8 billion in 2022 through rights issues and IPOs, driven by high liquidity and government privatization efforts.
Saudi Exchange Key Facts
- Total value of listed companies: SAR10.05 trillion
- Number of listed companies: 238
- Value of sukuk and bonds: SAR601.74 billion
- Total shares traded: 6.8 billion
Saudi IPO Process
The IPO process involves two stages: preparation and share selling. Companies appoint advisors to prepare regulatory documentation and submit a prospectus for approval. To list on Tadawul, companies must meet specific shareholder and capital requirements.
IPO Subscription Methods
Subscription can be done via:
- Personal presence at Saudi National Bank (SNB) branches
- SNB ATMs, for existing clients
- Digital platforms, for existing clients
Capital Market Authority Initiatives
The CMA has introduced measures to attract foreign investors, such as allowing direct investments and easing regulations for international participation. These efforts align with the Financial Sector Development Program to support Vision 2030.
Historical IPOs
Tadawul has seen significant IPOs, including Saudi Aramco’s record-breaking SAR96 billion offering in 2019. Despite the pandemic, IPO activity remained strong, with numerous listings in 2021 and 2022.
Future Trends
The IPO market is expected to grow, with projected transaction values reaching $4.24 billion in 2024. Tadawul aims to support Vision 2030 by enhancing private sector contributions and attracting foreign investments, making Saudi Arabia more investor-friendly.