Saudi IPOs bounce back ‘quicker than expected’

May 20, 2025, 7:52 AM

'Markets have been pretty resilient. That’s slightly against what we have expected, says analyst Shahrukh Saleem

Listings set to raise up to $1.8bn
Flynas, SMC and United Carton IPOs
2025 could still beat last year’s total

Three initial public offerings launched in the past six weeks stand to raise close to $1.8 billion on the Saudi Exchange – nearly twice as much as the IPOs on the main market in the first quarter.

This suggests the lull in Saudi IPOs that followed President Donald Trump’s “Liberation Day” announcement on April 2 has ended, according to analysts.

“Things are settling down quicker than expected,” said Muhammad Fawad Khan, equity research analyst at asset manager Alinma Capital. “I don’t think they’re going to slow down any time soon.”

The low-cost carrier Flynas could raise as much as SAR4.1 billion ($1.1 billion) from its share sale, the first in Gulf aviation for almost two decades.

The book-building process for the airline’s IPO ended on Sunday. Prince Alwaleed bin Talal’s Kingdom Holding Company is Flynas’ largest shareholder with a 37 percent stake.

Hospital and clinic operator Specialized Medical Company is pricing its 75 million shares at between SAR24 and SAR25 each, which means it could raise nearly SAR1.9 billion. SMC’s book-building exercise ended on Thursday.

Packaging company United Carton Industries has raised SAR600 million from retail and institutional investors, with the final allocation of shares at SAR50 each wrapping up on Sunday.

The Capital Markets Authority has not yet announced when the three companies will be listed.

Like stock markets around the world, the Tadawul All Share Index dived in the wake of Trump’s tariff announcement, prompting a pause in the pipeline of IPOs. Although the index has recovered somewhat, it is down more than 3 percent since April 2.

Despite the pause, 2025 could still be a blockbuster year for Saudi IPOs, beating last year’s $4.1 billion.

The market’s annual record was set in 2021, when Saudi Aramco alone raised almost $26 billion in a share sale.

In the three months to March 31, three companies listed on the Saudi main market – Derayah Financial, Entaj and Umm Al Qura. They raised more than $1 billion between them and all three hit the maximum 30 percent increase in share price allowed on the first day of trading.

Dozens more companies have requested Capital Markets Authority approval to list. Four more IPOs have been approved by the regulator, but have yet to go ahead.

Three won their approval in March: Sport Clubs Company, which manages fitness centres, housing developer Dar Al Majed and construction supplies company Marketing Home Group.

The fourth – Ejada, an IT services company owned by Al Rajhi Bank – received its six-month approval last December, leaving it fewer than six weeks to issue a prospectus before expiry.

“IPOs should continue as expected,” said Shahrukh Saleem, a portfolio analyst at asset manager Mashreq Capital. “Right now, markets have been pretty resilient. That’s slightly against what we have expected.”

Many of the companies considering a Tadawul listing are inward-looking, serving Saudi Arabia’s population of 33 million people and aligning themselves with state-backed development goals.

“Especially in Saudi, a lot of the demand comes from people who are already in the country, a lot of institutional investors,” said Saleem.

Further drops in the price of crude – Brent has been trading at below $65 per barrel since April 2, down from an average of $81 last year – could put further listings and Riyadh’s financial ambitions in question.

The International Monetary Fund has already revised down its forecasts for economic growth in Saudi Arabia.

“In this region, they will just look at oil prices,” said Saleem. “As long as oil prices are stabilised, you will still see IPOs.”