From IPO boom to standoff: Saudi Arabia’s capital markets ambitions meet a reluctant investor base
Saudi Arabia’s IPO market is struggling to sustain the momentum of recent years, as weak post-listing performance, valuation gaps, and geopolitical uncertainty are prompting regulators to rethink how IPOs come to market
Saudi Arabia's capital markets have experienced a downturn, with the country's IPO market struggling to recover after a weak performance in 2025. Only three companies have listed on the Tadawul and its parallel market Nomu so far this year, raising a combined $144 million, compared to $3.7 billion raised by Saudi companies last year.
The reluctance from investors to pay higher valuations has been largely due to the pricing standoff between company owners and investors. The ongoing U.S.-Iran war has added to the market's uncertainty, but the IPO market was already facing challenges due to weakening market valuations, liquidity issues, and increased investor selectivity.
In response, Saudi's Capital Market Authority (CMA) has proposed reforms to improve disclosure, strengthen price discovery, and increase accountability. These changes, such as requiring underwriters to purchase any shares that investors fail to subscribe for, may result in fewer IPOs in the short term, particularly for smaller issuers or aggressively priced offerings.
The reforms also aim to create a more sustainable IPO market by focusing on the quality of demand rather than the quantity of listings.
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