Market uncertainty won't slow Saudi IPO momentum: 46 listings expected
Saudi Arabia's IPO momentum continues to gain traction despite market uncertainty stemming from US tariffs and trade tensions in several international markets, which have derailed plans for a wave of new listings expected this year.
According to Riyad Capital, the kingdom remains on track with close to 46 offerings expected in 2025, across Saudi's Main Market and the Parallel Market, Nomu.
Speaking with Zawya, Muhammad Faisal Potrik, Head of Sell-Side Research, Riyad Capital pointed out that last year, the Saudi Main Market saw a total of 14 IPOs, adding: 'We expect the number of IPOs in 2025 to be similar to last year, in the range of 14 to16 [listings]. Sectors will continue to be diverse ranging from financial services, real estate, retail, technology, and aviation.'
Investor appetite in the Gulf is evolving, with the first quarter for Saudi closing with five milestone offerings on its Main Market across a range of sectors, three of which were completed this year, including brokerage Derayah Financial, developer Umm Al Qura, and poultry producer Entaj, which raised more than $1 billion between them.
The kingdom's parallel market has continued with its flurry of dealmaking, with Potrik saying that following on from last year, which closed with 28 IPOs on NOMU, the first quarter of 2025 remained just as strong with seven listings.
In February, Saudi Arabia's Capital Markets Authority regulator further announced it had greenlit five NOMU IPOs, including school operator Dome International, Asas Makeen Real Estate Development and Investment Company, Dkhoun National Trading Company, Axelerated Solutions for Telecommunications and Information Technology Co. and Al Kuzama Trading Company.
Market uncertainty
Despite a positive outlook, investors have been jittery in recent weeks with oil prices falling to a two-week low on Tuesday, while many others are bracing for OPEC+ to boost output and US tariffs to cause a further slowdown in demand for fuel.
While Potrik admits that trade tensions and market uncertainty, fuelled by US President Donald Trump's global tariffs, have slowed dealmaking, the bank continues to retain a 'positive view' on the Saudi market for FY 2025.
'While subdued oil price is broadly a challenge for the economy, oil as a commodity has continued to fluctuate historically. What is important to highlight is that the Saudi economy is much more diversified now and the contribution of the non-oil sector is much greater than in the past. Also, we do not expect any material impact to the ongoing projects in the kingdom, which will continue to drive economic growth,' he said.
For 2025, Riyad Capital estimates an overall GDP growth of more than 3%, while non-oil growth will remain strong, above 4%.
Potrik also dismissed the notion that the market could see some hesitation in moving ahead with planned listings.
'Despite volatile markets and economic fluctuations, the IPO momentum has been very strong at the Tadawul for the past five years,' he said.
'We do not expect any delays in IPOs as there is huge pent-up demand from both local and foreign investors for quality companies in sectors that are not adequately represented at the Tadawul. Thus, good names in, for example, the financial services or aviation or retail sectors are awaited by investors. Furthermore, the economic outlook for Saudi Arabia is far more stable than other countries.'
In the pipeline for Saudi is the much-anticipated IPO for budget airline flynas, which was cleared for take-off in March. The carrier, which is backed by Saudi billionaire Prince Alwaleed Bin Talal, has a planned float to sell a 30% stake, according to the Saudi CMA.
(Reporting by Bindu Rai, editing by Seban Scaria)
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