Two fund managers weigh in on underperforming 2025 IPOs

The numbers are telling: six of the seven companies that went public on Tadawul in 2025 ended their first year of trading below their offer price, with the group down an average of around 27%, according to our data. We asked two fund managers for their read on what’s driving it.

Priced for a future that never arrived: Some IPOs were simply priced for an outcome that never materialized, Osama Alowedi, founder and CEO of EQCM and former chief investment officer at SAB Invest, tells EnterpriseAM. "The important distinction is between a good company and a good investment," he says, a business can be genuinely strong and still make for a bad investment if too much of its future growth was already priced in.

Or maybe it's the market, not the pricing: Mohammed Swaid, CEO of Razeen Capital, points to the broader environment instead. TASI fell around 13% over 2025 and trading value dropped more than 30%, meaning many offerings were priced in a stronger market than the one they ended up trading in. “I would not interpret trading below the IPO price by itself as evidence that the listing process has failed," as markets are supposed to reprice companies, Swaid tells EnterpriseAM. The MSCI Emerging Markets Index gained roughly 33% over the same period.

Both separately flagged that oversubscribed order books don’t predict aftermarket performance. “Primary-market subscription demand and long-term secondary-market demand are not the same thing,” Swaid says, a pattern that played out repeatedly in 2025 with heavily oversubscribed IPOs still ending up well below their offer price months later.

A feedback loop already reshaping the pipeline: When recently listed companies trade well below offer price, institutional investors grow “more cautious about committing capital to the next transaction,” Alowedi tells us. Meanwhile, issuers become less willing to accept what the public market will actually pay, a gap that pushes some deals off the calendar rather than repricing them.

The fix isn’t green IPOs, but better price discovery: “Book building therefore needs to be genuine price discovery rather than simply a mechanism for validating the highest achievable valuation,” Alowedi says.

A bigger question hanging over all of this: The debate is playing out as reports circulate that the CMA has been contacting local and international investment banks about how 2025 IPOs were priced and allocated, per Asharq Business, citing unnamed sources. It also comes as Mazen Al Sudairi takes over as CMA chairman, with speculation building that the exchange could raise its foreign ownership cap, Morgan Stanley estimates a move to 75% could draw in roughly USD 4.3 bn in fresh inflows, rising to USD 7.4 bn if restrictions were lifted entirely.

Alowedi sees that shift as structurally positive, not just for headline inflows. “The more important effects are deeper liquidity, broader price discovery, a larger institutional investor base and potentially a lower cost of equity for Saudi companies,” he says, with the added scrutiny that comes from more sophisticated foreign capital ultimately raising governance standards across the market.