Saudi IPO issuance stalls as owners + investors deadlock on price

Saudi IPO issuance has all but halted this year over a disagreement on price between owners and investors. Owners aren’t willing to list at what the market will now pay, and after a year in which most new listings lost money, investors aren’t willing to pay more. Three companies — Dar Al Balad (DBS), Saleh Abdulaziz Al Rashed, and MSGA — have gone public so far this year, raising SAR 522.6 mn. The total raised from these three IPOs is some 4% of the SAR 13.27 bn raised over the same eight months of 2025, when 25 companies listed, according to the Saudi Exchange’s annual report (pdf).

The pressures usually blamed for the drought all push in the same direction: Higher-for-longer interest rates, the US-Iran conflict, and a regulator taking a harder look at how banks value companies give owners a reason to wait, while investors are left without a reason to bid.

A year of losses set the tone

Six of the seven companies that listed on Tadawul in 2025 ended their first year below their offer price, falling an average of around 27%. This year’s cohort has been more mixed: DBS is up about 21% from its IPO price, MSGA about 4%, and Saleh Al Rashed is down 8%. The spread reflects pricing, sector risk, and market conditions, with some offerings appearing to have priced in optimistic assumptions about sector growth.

That record has changed how investors behave when they do participate. Poor post-listing performance encourages buying at the IPO and selling within a week or 10 days to book a return rather than holding, Riyadh-based investment banker Mustafa Fahim tells EnterpriseAM. “No one will be interested in investing for the long term,” he says, adding that this is the problem that needs to be fixed.

Saudi issuers are also valued on a narrower set of inputs than their peers elsewhere, Fahim tells us, including growth prospects, financial returns, and fundamentals, leaving less room for wagers on long-term value. In more developed markets such as the US, investors can put more weight on the technology a company has built or is buying.

Everything moving against valuations moves against supply

Rates are the first squeeze: Saudi monetary policy is expected to track contractionary steps in the US, with higher rates predicted by the end of the year, Fahim says, raising the cost of equity and “making an IPO less attractive.” A higher weighted average cost of capital pushes down valuations, and owners respond by declining to list at the resulting price.

Geopolitics supplied the trigger for this year’s delays: The US-Iran conflict pushed investors to caution and issuers to “postpone rather than launch into volatility,” MT Trading Senior Economist Ahmed Chreim tells EnterpriseAM. “That’s disciplined timing by issuers and their advisors, not a lack of appetite.” Mutlaq Al Ghowairi, Arabian Dyar, and Kesay Clinics all pushed back offerings, while the six-month windows granted to Alandalus Educational and Alromansiah expired unused.

The regulator’s response tightens the same screw. The Capital Market Authority is engaging several investment banks and questioning their valuation methodologies, which Fahim says pushes banks toward conservative, rather than optimistic, numbers. For an owner, a lower valuation is now an argument for waiting until multiples rise and rates fall.

A state-backed issuer is the near-term way out

The reforms that banks and investors are calling for — looser foreign ownership limits and faster approvals for companies waiting to list — are longer-dated. “For this year and into 2027, I don’t think they will make a meaningful difference because the performance of the IPO market is more structurally driven rather than just being driven by these changes,” Fahim tells us.

What could move sooner is a seller less sensitive to price. Fahim argues the government could restart the market by taking semi-government and PIF-owned entities public, where brand and market perception would draw investors back in and reset expectations for what a new listing does after the bell.

The pipeline is intact in the meantime. Humain is eyeing an IPO, with potential listings from Tabreed and Richard Attias & Associates behind it. “The fundamentals here are strong,” Chreim says. “As regional geopolitical uncertainty eases, I’d expect the combination of reform momentum, PIF support, and a deep, sector-diverse pipeline to translate into a strong finish to 2026 and an even stronger 2027.”