Saudi Arabia, the UAE, and Oman are each rewriting IPO rules to fix a credibility problem

The IPO accountability reckoning is here: The Saudi Capital Market Authority (CMA) closes public comment tomorrow on a draft that would make underwriting banks buy any IPO shares investors don’t take, force institutional bidders to prove the cash behind their orders, and require issuers to publish at least a year of forecasts.

The CMA has been circling the gap between covered books and post-listing performance for most of the past year, a drive that has accelerated under new leadership. Of 37 Saudi companies that floated on the main market Tadawul and the small-cap Nomu in 2025, 29 were below their IPO price as of the summer, according to Argaam estimates. In 2026, only two main-market listings made it, while another two — Mutlaq Al Ghowairi and Arabian Diyar — walked back their plans after getting the ball rolling on pricing or bookbuilding, citing unfavorable market conditions. And many of those who were planning a listing shelved or postponed their plans in 2026 — seventeen companies had applications pending for Tadawul’s main market at the end of June, but the CMA approved none in 2Q and 3Q, according to our trackers.

The war is not the main driver of the rewrite, but it has made it urgent. Low oil, conflict with Iran, disrupted oil exports, and rising US yields have “exposed the shortcomings in IPO regulations, not the scarcity of good companies,” Hasnain Malik, emerging market equity strategist at Tellimer, tells EnterpriseAM.

The clearest case-in-point: Budget carrier Flynas — the Gulf’s largest 2025 IPO and the region’s first airline listing in nearly two decades — drew around SAR 409 bn (c. USD 109 bn) of institutional orders for a USD 1.1 bn offering in June 2025, a book 100x oversubscribed. It priced at SAR 80, but now trades around SAR 50, down close to 37%.

The IPO blues are not exclusive to Riyadh. The UAE has so far had no IPOs this year, although it’s set to end the drought in 4Q as Dubai Investments Park sounds out institutional investors through 26 October. Across the GCC, IPOs last year brought in USD 5.8 bn from 42 IPOs, the thinnest haul in five years and 54.8% below 2024, according to Kamco Invest data. Of those listings, 28 closed the year underwater.

The lesson is the same across the IPOs that tanked: “A very large covered book doesn’t necessarily mean the demand behind it is real, and it doesn’t ensure strong post-listing performance,” Salah Shamma, head of MENA equities at Franklin Templeton, tells EnterpriseAM.

That’s why several regulators are rewriting different parts of their capital market rules for better accountability: The UAE’s new Capital Markets Law has reshaped prospectus liability to fall on the board of issuers. Oman is mandating a stand-alone investment banking license for capital markets. Turkey has capped hedge-fund exposure in a single stock’s freefloat or multiple stocks held by one group, which is more relevant to post-IPO trading rather than the issuance itself.

But each is reaching for a different accountability lever. “I see convergence in the objective, but not in the problem being solved,” Tahir Abbas, vice president and head of research at Ubhar Capital, tells EnterpriseAM.

Three markets, three different headaches

In Riyadh, the problem is demand that looks bigger than it actually is. The CMA draft would make the underwriting agreement binding before book-building begins, rather than before retail subscription, as is currently the case. From that moment, the bank must buy any unsold shares, up to the whole deal. Banks taking institutional orders would have to check each bid against cash or near-cash the investor actually holds, including securities it can sell within the payment window. Issuers would be required to publish at least a year of forecasts. The provisions take effect 2 November if approved.

The UAE had the tools, but not the legal cover. ADX and DFM rules allowed banks to stabilize a new listing’s price, but the old federal law treated any trade aimed at moving prices as a crime, so banks hired third-party stabilization managers to stay safe. The new Capital Markets Law, in force since 1 January, regularizes the status of third-party stabilizers and makes the issuer’s board, executive management and advisers liable for a misleading prospectus, with fines of up to AED 200 mn. “From an investor’s seat, the one that matters most is board liability for the prospectus,” Shamma says, adding that “accountability is a big part of why investors trust the disclosure they’re pricing.”

Oman is giving investment banking a license of its own. “The change is less about bringing underwriting out of the informal sector and more about institutionalizing Oman’s investment banking industry under a dedicated capital markets framework,” Abbas tells us. The older rules allowed commercial banks a license to act as issue manager coordinating with the regulator, the exchange, the subscription banks, and the underwriter, with traditional liability for damages caused by negligence, but is now changing that in what appears to be a bid to remove any potential conflict of interest.

Omani commercial banks will now have to spin out a dedicated investment bank unit with its own separate license to conduct capital market activity. Omifco’s USD 675 mn float in June is the old model at work. Bank Muscat acted as sole issue manager and joint global coordinator alongside Société Générale, plus the collecting bank with its Islamic arm, Meethaq; the two together, by the bank’s own account, “accounted for a majority of collections for the IPO.” That’s four roles for one commercial-banking license on one transaction. The Executive Regulation, in force since 27 July, gives banks three years to move most securities work into separate firms, though underwriting can stay in-house.

Pick your backstop

Riyadh’s draft goes straight at the bank’s incentives. “If underwriters commit to taking the full [transaction] from the start of book-building, they have a much stronger incentive to challenge aggressive valuations and weak or poorly funded demand,” Abbas says. Malik would go further and cap each institution’s order relative to the size of its fund to stop “the build-up of fictitious demand and an overinflated share price at the time of listing.”

The timing is where investors and the Saudi CMA differ. Most international markets sign the firm commitment at pricing, backed by a greenshoe and stabilization, Shamma notes. “Internationally, banks commit at pricing, once demand is known, so their risk lasts only days. Commit at bookbuilding, and the bank is guaranteeing the deal before it sees the book.”

The banks are pushing back. Lenders warn that carrying an entire offering could breach their equity-holding limits and further chill listings, Bloomberg says. The draft has a sharper edge too: If the bank’s resulting stake stops the issuer from meeting listing requirements, the shares can’t list, but the bank still has to buy them.

That leaves a bank facing three risks. A stake it may not be allowed to hold; a commitment that eats into its regulatory capital, liquidity and exposure limits; and in the worst case, shares in an unlisted company with no public-market exit. And some fear the rules would leave the field to a handful of big domestic banks who are able to take on these risks.

What rules can’t fix is valuation. The new rules “may avoid inflated valuation at the time of listing and improve the prospects of share price performance thereafter,” Malik says. Even so, “if an owner’s only motivation is price and that price isn’t there, then there’s a disconnect to bridge, and something needs to adjust,” Shamma says. He adds that many sellers come to market for reasons beyond price: Institutionalizing the business, accessing deeper and more diverse pools of capital, or securing continuity for the next generation.

The next gap sits after the bell

Listing day isn’t where accountability should stop. “I believe the next accountability gap is likely to be what happens after the allocation,” Abbas says. The first step, he argues, is disclosure around how concentrated allocations are among major investors, how much they sell shortly after listing, and whether post-listing trading reflects long-term interest or short-term participation. “Accountability should not end once an IPO is listed. It should also consider book-building quality, pricing decisions, disclosure standards, and investor behavior after listing,” he says, “while still allowing investors the flexibility to make their own trading decisions.”

One regulator has moved onto that frontier — and the reason is almost the complete opposite. Istanbul’s Capital Markets Board capped hedge-fund exposure in late August after a run of unusual returns at funds concentrated in low-float stocks. Tera Portföy’s First Hedge Fund (now in liquidation) had reported a 2025 return above 4,000% in what now proved to be a case of manipulation to inflate prices and the free-float size of a few stocks. Under the new rules, a hedge fund can hold between 2% and 8% of a company’s freefloating shares, with the tighter cap biting on the smallest free floats, and no more than 20% of its portfolio in securities issued by companies controlled by its own management. We covered the fund blow-up and its wind-down earlier this month.

Turkey’s new caps stand out because they measure them against the freefloat, not the larger size of the company. Most MENA markets limit a fund’s exposure to a single stock by reference to the fund’s own size — a cap on how much of the fund can sit in one issuer. Istanbul caps how much of the issuer’s freefloat a fund can hold, keyed to how thin that freefloat is. One is a rule about diversification; the other is a rule about market concentration. The first protects the fund’s investors from undiversified risk. The second protects the stock from a single fund owning enough of its tradable supply to move the price. That’s because the regulator is responding to a different problem: Manipulation, not book-building credibility.

What’s worth watching in Saudi’s new rules is whether the bank’s commitment still starts at book-building or moves to pricing, as Shamma suggests. DIP’s investor meetings run through next Monday, 26 October, the first live read on the UAE’s new regime. Omani banks have until July 2029 to spin off their securities arms, and the first Omani IPO under the new rules has yet to be announced.