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Strong post-IPO performance bodes well for Saudi flotations

A diabetes awareness event organised by the Dr Soliman Abdel Kader Fakeeh Hospital; the Saudi medical company conducted the largest IPO, selling 21.5 percent of its stock for $764 million Dr Soliman Fakeeh Hospital
A diabetes awareness event organised by the Dr Soliman Abdel Kader Fakeeh Hospital: the Saudi medical company conducted the largest IPO, selling 21.5 percent of its stock for $764 million
  • 14 Saudi IPOs since 2024
  • Raised more than $100 million
  • Most trade above IPO price

Recently floated Saudi Arabian companies have thrived since listing on Riyadh’s bourse, thanks in part to astute pricing of initial public offerings and foreign institutional investors’ growing participation.

Since the start of 2024, there have been 14 IPOs in Saudi Arabia that raised more than $100 million, according to data compiled by AGBI and London Stock Exchange Group (LSEG).

Eleven of these companies trade at above their IPO price as of market close on January 12 and nine are up more than 10 percent. These gains come despite the wider market’s stutters, with the main index near-flat over the past 12 months.

This bodes well for this year’s IPOs. Five companies have approval to go public, including Derayah Financial, technology business Ejada Systems, animal feed maker Arabian Agricultural Investments and packaging company United Carton Industries. About 30 more are awaiting the regulatory nod to do likewise.

“Saudi will see a strong flow of smaller offerings from a wide range of sectors,” says Shakeel Sarwar, head of asset management at Bahrain’s Sico Bank.

That would be a continuation of last year’s trends. The average amount raised by the 14 IPOs over $100 million was $271 million. 

Dr Soliman Abdel Kader Fakeeh Hospital Co conducted the largest, selling 21.5 percent of its stock for $764 million. All other companies completing IPOs sold 30 percent of their shares.

In early 2025, two companies listed on Riyadh’s bourse following December IPOs. Nice One Beauty is up 45 percent since making its bourse debut on January 8, while Almoosa Health Co has gained 5.4 percent.

Water company Miahona is the best performer post-listing, surging 147 percent, while Rasan Information Technology Co and perfume maker Al Majed for Oud Co are other standouts.

“Unique and high-growth businesses like Rasan and Miahona were rewarded much more than traditional businesses,” says Sarwar.

Historically, the petrochemicals and banking sectors have dominated Saudi Arabia’s bourse. Yet recent IPOs have provided investors with exposure to previously unrepresented economic sectors, with about two-thirds of flotations by companies that are protagonists in – and beneficiaries of – Vision 2030, explains Aqib Elahi Mehboob, head of sell-side research at BSF Capital in Riyadh.

“That’s an important reason why investor appetite for IPOs has been so strong,” says Mehboob.

The average post-listing stock gain among the 14 Saudi companies is 35 percent. The worst performer is Fourth Milling Co, which is down 25 percent.

The stellar performance of Acwa Power, whose stock price has risen seven-fold since its 2021 flotation, has helped to boost IPO sentiment more broadly, says Mehboob.

“Many companies have shown strong earnings growth, and they still have a strong growth horizon ahead,” he says. “That has boosted local investor confidence in companies which operate in sectors they weren’t able to invest in previously.”

Domestic retail investors can borrow up to 10 times the amount of their collateral from banks to invest in Saudi Arabian IPOs, while digitalisation has made it significantly more straightforward to subscribe, swelling retail IPO subscription levels.

Qualified foreign institutional investors are also a growing presence in Saudi IPOs, says Mehboob.

In terms of valuations, Saudi IPOs have been priced typically in the middle of the valuation range of BSF Capital’s in-house analysis.

“Conservative valuations have left some upside from investors post-listing,” says Mehboob.

IPO subscribers receive small allocations as a result of high subscription levels, so many seek to increase their holdings once the company lists on Riyadh’s bourse.

International interest

The lacklustre performance of emerging markets outside the Gulf along with the region’s dollar pegs, which removes foreign currency risk for US investors, have also boosted the attractiveness of Gulf IPOs and stock markets, says Mehboob.

“Some hedge funds have done very well buying Saudi stocks on their first day’s trading,” he says, explaining that such entities tend not to invest in the IPOs because of the small allocation sizes.

A common theme for 2025 will again be that the companies doing IPOs are connected to Vision 2030 and primarily involved in the domestic economy. These could include tourism, aviation, infrastructure, education and manpower companies, Mehboob predicts.

Saudi Arabian IPOs will range typically from $300 million to $1.5 billion, Mehboob says. Most will be privately run companies although some quasi-government businesses could also float.

“The 2025 IPO pipeline is very strong, with some interesting transactions due to come to market,” adds Mehboob. “If oil prices perform better this year, that will help IPOs.”

UAE is a different story

Saudi Arabian companies’ post-listing gains contrast with the middling performance of the seven UAE businesses to go public last year. Of these seven, three are trading at below their IPO price.

Supermarket chain Lulu Retail Holdings, which sold $1.7 billion of shares in its IPO, has fallen 2.5 percent. Delivery app Talabat, which raised $2 billion in the UAE’s biggest IPO last year, is now trading just above its flotation price having recovered from a post-listing sell-off.

“IPO sizing was the main reason for the poor performance of UAE IPOs,” adds Sarwar, noting Talabat and Lulu both increased the size of their IPOs.