While startups in many regions grapple with a scarcity of funding, Saudi Arabia’s burgeoning pipeline of initial public offerings (IPOs) is poised to kindle investor enthusiasm for ventures often deemed too perilous. This comes during a period marked by global reticence in the IPO arena.
In contrast to the global pullback, Gulf nations have been briskly producing IPOs, defying the broader trend. Over the course of 2022 and 2023, the Middle East’s stock markets saw 99 IPOs come to fruition, amassing an aggregate of approximately $33 billion, as reported by Ernst & Young. Notably, however, the region’s tech sector was scarcely represented in these offerings, with Israel being an exception.
Recent developments indicate a shift in this pattern. Saudi Arabia’s Capital Market Authority sanctioned the IPO registration for Rasan, an online insurance platform, while news surfaced of Abu Dhabi-based edtech firm Alef’s preparations for an IPO. In tandem, Saudi e-commerce software startup Salla disclosed a substantial pre-IPO investment of $130 million. These companies are part of an expanding roster of local tech entities signaling an intent to enter the public markets.
Despite a widespread downturn in venture capital inflows and depreciating valuations, prime Saudi startups are attracting notable investments. This is exemplified by fintech firms Tabby and Tamara, each of which has achieved valuations surpassing the billion-dollar mark. Gulf states are fostering such listings in a bid to broaden their capital markets and lure international capital. This initiative has ignited a privatization wave leading to significant listings, including the ADNOC Gas IPO, which raised a mammoth $2.5 billion in 2023. The burgeoning trend encompasses a diverse array of industries, with noteworthy entities like broadcasting behemoth MBC and even the possibility of Etihad Airways as the inaugural premier Gulf airline to list publicly.