Saudi Arabia's 2024 IPO pipeline grows 30% as listing momentum continues

There are 56 companies seeking to float shares on the Arab world's largest bourse, chairman of Capital Markets Authority says

An investor walks past a screen displaying stock information at the Saudi Stock Exchange (Tadawul). Reuters
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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 by market capitalisation, the head of the kingdom’s Capital Markets Authority has said.

There are currently 56 big and small companies 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 on Monday.

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 its peers in the six-member economic bloc of the GCC are expected to have another bumper year of IPOs, driven partly by the regional governments’ push for privatisation.

The growing appetite of private sector companies to raise capital and strong investor demand for fresh listings have also helped to sustain IPO momentum.

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

Although the overall value of funds raised through primary public listings dropped by about 55 per cent annually, the number of IPOs in the GCC was 46 last year, close to the 48 public listings recorded in 2022, the data found.

Companies raised $3.5 billion on the Saudi Exchange 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 Tadawul 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 (ICT) 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, he 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.

Separately, Saudi Aramco, the world’s biggest oil producing company, is likely to issue a bond this year and will prioritise longer tenures of up to 50 years, Reuters cited its chief financial officer Ziad Al Murshed as saying at the forum on Monday.

The planned issuance is part of a strategy to optimise the company's capital structure, Mr Al Murshed told delegates.

Aramco, whose shares trade on Tadawul, last tapped global debt markets in 2021, when it raised $6 billion from the sale of a three-tranche sukuk, or Islamic bond.

Asked about reports of a planned follow-on share sale by Aramco, whose biggest shareholder is the Saudi government, Mr Al Murshed said he could not comment as it was not the company's "decision as to the sale of existing government shares".

Saudi Arabia is poised to sell more shares of energy giant Aramco, sources told Reuters this month, which could boost the country's funding and its aim to shift the economy away from oil.

The share sale could raise about $20 billion, according to Bloomberg. Saudi Aramco has not confirmed the figure.

Aramco completed the world’s largest IPO in late 2019, raising $25.6 billion and later selling more shares to raise the total to $29.4 billion.

Updated: February 19, 2024, 1:45 PM