Saudi Arabia has 23 IPOs in the pipeline as it builds on busy year

Saudi Tadawul Group

• Regulator says another 75 companies are under review for listing
• Nasdaq chief hails ‘vibrant’ IPO environment during forum in Riyadh
• Bosses aim to make Tadawul the world’s 3rd largest market

Saudi Arabia has more than 20 companies on the launchpad for initial public offerings, according to its financial regulator, as the Tadawul stock exchange looks to build on its strong run.

Mohammed El Kuwaiz, chairman of the Capital Market Authority, told the Saudi Capital Market Forum on Sunday that 23 businesses had been approved for listing in 2023 and another 75 companies were under review.

Also speaking at the forum in Riyadh, Adena Friedman, chair and CEO of Nasdaq, hailed the “vibrant” IPO environment in the kingdom.

“This region is one of the fastest-growing in the world,” she said. “Saudi has done a tremendous job of bringing capabilities into the market so they can compete with global mature markets. It’s a testament to amount of focus, energy and leadership in the country.”

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Saudi Tadawul Group also announced a number of agreements with regional and international exchanges at the forum. Memorandums of understanding have been signed with stock markets in Singapore, Egypt and Qatar.

Khalid Al Hussan, CEO of Saudi Tadawul Group, said: “Our aim is to collaborate with regional and international exchanges on areas ranging from dual listing, ESG, fintech, diversity and inclusion to achieve our goal of becoming an investment destination linking East and West. 

“These agreements will also further our efforts to deliver an advanced, diverse and integrated capital market for regional and international investors, in line with the financial sector development programme under Vision 2030.”

He added: “This market has great potential, capable of delivering big achievements.”

The forum, which brought together 2,000 issuers, investors and other market participants, also heard from Mohammed Al Rumaih, CEO of Saudi Exchange, which operates as a subsidiary of the Tadawul group.

Outlining IPO ambitions for the exchange, he said: “We aim to become the third largest market globally and first in the Mena region. Today, we are one of the top 10 globally, based on IPO proceeds for the last two years.”

Al Rumaih added that the market was due to add several features this year. They include inbound depositary receipts, designed to attract more foreign companies, and single stock options contracts, which are expected to launch in the second quarter subject to regulatory approvals.

On day two of the forum, analysts predicted further growth.

Finlay Wright, head of equity market solutions, Middle East & Asia, Rothschild & Co, said on Monday: “We’re seeing lots of interest here after the Americana IPO. Strong macro conditions, confidence around structural changes, high-quality IPOs and exposure of investors to new sectors will continue to drive growth.”

Alex Watkins, co-head of equity capital markets EMEA at JPMorgan Chase & Co, pointed out that Saudi IPOs were the best-performing cohort of offerings globally, with a median aftermarket performance of 20 percent.

The market capitalisation, or total value of all shares of all securities traded on the Saudi Stock Exchange, was $2.64 trillion as of February 2, according to data from the World Federation of Exchanges.

The Saudi main index ended trading higher on Sunday, gaining 7.28 points to close at 10,419.44 points. The total value of trading was reported at SR2.6 billion ($700 million).

The Nomu, Saudi’s parallel market, gained 170.01 points to close at 19,536.84 points, with a valuation of SR21.4 million.

Earlier this month, the EY Mena IPO Eye Q4 2022 report said stock markets in the Middle East and North Africa were preparing for a strong pipeline of IPOs in the coming months, building on the 51 IPOs last year.

The report said Saudi Arabia continued to dominate the region’s listing activity in Q4. There were seven IPOs on the Tadawul main market, raising $4.7 billion, and six IPOs raising $65.2 million on the Nomu parallel market. 

Highlights included a first-time dual offering and concurrent IPO on Abu Dhabi Securities Exchange and the Tadawul by Americana. In total, the company offered 30 percent of the equity to raise $1.8 billion.

State-led IPO programmes in Saudi Arabia, Abu Dhabi and Dubai have helped equity capital markets in the Gulf, in sharp contrast to the US and Europe where global banks have been trimming headcount in a deal-making drought.