IPO requests in Saudi Arabia rise by 30%

Reuters/Ahmed Yosri

• Number beyond analysts’ predictions
• Saudi Aramco likely to issue bond
• Tenures up to 50 years a priority

Saudi Arabia’s Capital Market Authority said this week that it had received 56 initial public offering applications, a number well ahead of analysts’ expectations.

State oil major Saudi Aramco is also likely to issue a bond this year. 

CMA chief Mohammed ElKuwaiz told a capital markets forum in Riyadh on February 19 that the applications were a 30 percent increase on last year, covering the main Saudi stock market and the parallel market Nomu. 

• Gulf markets attracting more international investors
• Appetite high for Aramco’s $10bn second listing
• Stock-picking in Chinese, American and Middle Eastern markets

Businesses from Saudi Arabia and the UAE are expected to dominate Middle East IPOs in 2024, according to a recent report by consultants EY.

Before the Saudi announcement, EY only expected 30 IPOs across the Middle East and North Africa region. 

Ziad Al-Murshed, Saudi Aramco’s chief financial officer, told the forum the company would prioritise longer tenures of up to 50 years when issuing bonds. 

Aramco last tapped global debt markets in 2021, when it raised $6 billion from the sale of a three-tranche Islamic bond. 

Saudi Arabia is set to hire banks including Citigroup, Goldman Sachs and HSBC Holdings for a potential secondary share sale in Aramco that could raise nearly $20 billion, news reports said earlier this month. 

The government owns about 90 percent of the company, the world’s largest oil producer, while the sovereign Public Investment Fund (PIF) holds another 8 percent.

Crown Prince Mohammed bin Salman said in January 2021 that the government plans to sell more Aramco shares.

Saudi Arabia is using oil revenues and PIF earnings for its Vision 2030 project, a massive development programme intended to diversify the economy away from oil, centred on giga-project cities such as Neom, Diriyah and Qiddiya. 

Non-oil income remains low but growing. 

“If you look at the non-oil GDP, it is growing at very healthy numbers, north of four percent – we are expecting five percent-plus in the medium term. That is very strong growth,” finance minister Mohammed Al-Jadaan told the forum. 

Non-oil revenue rose 11 percent in 2023 to SAR458 billion ($122 billion), accounting for 40 percent of government revenue, the finance ministry said this month. 
Analysts also pointed to non-oil growth last year as the economy shrank due to oil production cuts.