More companies in Saudi Arabia plan IPOs amid growth momentum

Saudi Arabia’s Tadawul stock exchange has a strong initial public offering pipeline with more companies seeking to list on the Arab world’s biggest bourse, the head of the kingdom’s Capital Markets Authority has said.

Fifty-six companies are looking to raise funds by floating their shares on Tadawul’s Main Market and its Nomu-Parallel trading platform, a 30 per cent increase from the same period last year, CMA chairman Mohammed El Kuwaiz said at the Saudi Capital Market Forum in Riyadh.

The IPO momentum carried over into 2024 from the past three years indicates “Saudi Arabia is encountering the proposition of transforming from a net exporter of capital to a net importer of capital”, he said. And this means the kingdom requires a “very different infrastructure”, he added.

Saudi Arabia and other GCC states are expected to have another bumper year of IPOs, driven partly by government push in the region for privatisation.

GCC companies raised $10.79 billion in IPOs last year, data from Bloomberg and stock exchanges indicates.

Although the value of funds raised through primary public listings dropped by about 55 per cent annually, the number of IPOs in the GCC stood at 46 last year, compared with the 48 recorded in 2022, the data shows.

Companies raised $3.5 billion on the Tadawul through 35 offerings last year, recording the highest number of IPOs in the GCC during 2023 and 35 per cent of the total proceeds, according to data from Kamco. In the past three years, the bourse has recorded more than 120 listings across its markets that helped raise more than $100 billion for the issuers, Mohamed Al Rumaih, chief executive of the exchange, told the forum.

The growth of the kingdom’s capital markets has not only helped in fuelling economic growth but has also boosted foreign investment.

The number of qualified foreign investors in the kingdom rose by a multiple of more than 70, from 50 in 2017 to 3,700 by the end of last year, he said.

Mr El Kuwaiz said information, communication and technology was the best performing sector in the kingdom last year.

While Saudi Arabia’s equity capital markets have grown briskly, development of its debt capital market needs to accelerate, Mr El Kuwaiz said.

The private sector’s local outstanding debt issuances need to account for 18 per cent of Saudi Arabia’s GDP by 2030 from the current 4 per cent level, he added.

Fifty-six companies are planning to launch their IPOs on Tadawul’s Main Market and its NomuParallel trading platform