Saudi IPO Market Collapses to $144 Million as Pricing Standoff Bites

Saudi Arabia's IPO market has raised just $144 million so far this year—4% of the $3.53 billion raised in the same eight-month period of 2025, when 25 companies went public, according to the Saudi Exchange 2025 Annual Report.

Only three companies—Dar Al Balad, Saleh Abdulaziz Al Rashed, and MSGA—have listed across the Tadawul main market and the smaller parallel market Nomu. The contrast with recent years is stark. Saudi companies raised $3.7 billion through share sales last year, more than the rest of the Gulf combined. In 2022, 17 listings raised $9.8 billion.

The freeze stems largely from a pricing standoff. Company owners refuse to list at valuations the market will accept, while investors, burned by a year of losses on most new listings, refuse to pay more. Bloomberg data shows that of the 17 companies that have gone public on the kingdom's main market since 2025, only four trade above their issue price.

The delays are piling up. Three planned listings—from Mutlaq Al Ghowairi, Arabian Dyar, and Kesay Clinics—have been postponed this year. Six-month extensions granted to Alandalus Educational and Alromansiah have since expired.

The ongoing U.S.-Iran war has added uncertainty, but the market was under pressure before the conflict began. Valuations have compressed, liquidity has weakened, and investors have turned selective as the cost of capital and risk premiums climbed.

The Regulator Strikes Back

The Capital Market Authority (CMA) has responded with a sweeping set of proposed reforms. The most consequential: underwriting commitments would take effect when book-building begins. Underwriters would have to buy any IPO shares investors fail to subscribe for, potentially leaving them on the hook for an entire offering.

The proposal follows reports last month that the CMA has been investigating the poor performance of recent IPOs, including post-listing earnings shortfalls. The regulator has requested detailed information from global and local investment banks on how IPOs were priced and allocated, amid concerns that headline oversubscription did not always reflect genuine, immediately available investment capacity.

"I believe the proposed rules should increase accountability, improve disclosure, and strengthen price discovery," says Osama Alowedi, founder and CEO of Riyadh-based asset management firm EQCM and former chief investment officer at SAB Invest, a subsidiary of Saudi Awwal Bank. "This will help create greater discipline around valuation and help ensure that deals are priced more sensibly."

The reforms would also require companies to disclose forward-looking statements, forecasts and financial performance indicators covering at least the following year.

"In the absence of hard underwriting commitments and formal forward-looking expectations, accountability for both issuers and underwriters is relatively weak," says Alowedi. "Some recent IPOs came to market and their fundamental performance shortly after listing fell short of what had been informally indicated to institutional investors during the IPO process."

Shifting more execution and funding risk onto underwriters could shrink deal flow. "It could mean fewer deals in the short term, particularly for smaller issuers or offerings priced aggressively against current market multiples," says Tahir Abbas, head of research at Oman-based Ubhar Capital. "In my view, that would be a reasonable trade-off if it results in better-priced IPOs, stronger aftermarket performance and greater investor confidence. The objective should shift from maximizing the number of listings to building a more sustainable IPO market where the quality of demand matters as much as the size of the book."

A Broader Opening Campaign

The proposals form part of a wider CMA effort to stimulate trading. In August, it revised derivatives trading rules to attract foreign investors and boost liquidity, cutting trading fees and enlisting firms to act as market makers. In mid-September, Bloomberg reported that public money-market funds have been asked to limit assets held outside Saudi Arabia to 5% within two years—a circular the CMA said could steer as much as $7 billion into domestic assets.

Restrictions on foreign investment were eased at the start of February, replacing the qualified foreign investor regime. The same month, the CMA said it was reviewing a proposal to raise the foreign ownership limit—currently capped at 49%, leaving the kingdom the only major Gulf market with such a ceiling. Morgan Stanley analysts estimate removing the cap entirely could attract roughly $7.4 billion into Saudi equities.

"Raising the 49% foreign ownership ceiling would be an important step, particularly for larger global investors that need meaningful position sizes," Abbas says. "The February opening of the market to all foreign investor categories was also important, but the ownership ceiling remains the more significant constraint on foreign institutional participation."

Bankers Look Elsewhere

The Gulf-wide slump is already redistributing deal flow. Firms including HSBC and EFG Hermes are scoping equity opportunities in Egypt, Turkey and India. Secondary share sales in Turkey have raised $1.6 billion so far this year, nearly double a year earlier; HSBC leads the country's league tables with seven transactions worth a combined $552 million, versus two deals worth $260 million last year. Law firms such as Baker McKenzie and Akin are pivoting toward debt and M&A work—deal values involving Gulf entities rose almost 200% in the first half to around $300 billion, according to Bloomberg data.

There is little sign Saudi listings will revive soon. Abbas expects fourth-quarter IPO activity to remain very limited or even non-existent. "Issuers are likely to remain sensitive to market liquidity, valuation levels and geopolitical risk, but activity does not necessarily need to wait for a full resolution of the regional conflict," he says. "If volatility moderates and liquidity improves, the IPO window could reopen before that point."

For 2027, he expects a healthy pipeline of eight to 10 listings across financial services, healthcare, industrials and consumer businesses—though many remain at the announced or preparation stage rather than CMA-approved. "Timing will depend heavily on market conditions and achievable valuations," Abbas adds. "The key test will be whether the CMA reforms restore confidence in price discovery and translate strong primary demand into better aftermarket performance."