Saudi Firms Advance IPO Plans in Boost for Flagging Local Bourse

Saudi Arabian firms are accelerating plans for initial public offerings (IPOs) as they seek to revive the underperforming local stock market. The move comes amid weak investor appetite due to volatile oil prices and broader geopolitical uncertainties. This effort follows a lack of major listings in 2026, contrasting with the pace seen in previous years.

A range of companies across key sectors are considering going public, including an oil field services firm, a manufacturer, a telecom provider, and a construction contractor. These IPOs could bring fresh liquidity to the market and provide much-needed momentum to the Tadawul All Share Index. However, valuations will be under close scrutiny given past underperformance.

Several major firms are in early stages of preparing for listings. AlKhorayef Petroleum, a Dammam-based company with operations in the Middle East, Africa, and Latin America, is working with Citigroup, JPMorgan Chase, and BSF Capital on a potential share sale. The company is controlled by the AlKhorayef Group and backed by Saudi Arabia's Public Investment Fund (PIF).

ArcelorMittal Tubular Products Jubail is also exploring an IPO with support from Moelis & Co. and plans to add more banks to the deal. The firm is jointly owned by the PIF and the global steel producer ArcelorMittal. Meanwhile, Etihad Salam Telecom Co. is preparing for an IPO arranged by BSF Capital.

The IPO landscape has faced challenges in recent months. In 2025, Saudi companies raised $4.2 billion through IPOs, but just two of the 10 largest new listings have traded above their offer price. This trend marks a reversal from previous years, when new stock debuts often saw strong early gains.

The Tadawul All Share Index has struggled in 2025, ranking among the worst-performing emerging markets. This decline has led the PIF to slow the pace of its share sales, which are part of its strategy to build out local equity markets. The underperformance has also raised concerns among investors and banks.

Why Did This Happen?

The push for more IPOs reflects both market demand and regulatory pressures. Some banks have called on Saudi regulators to reconsider rules that encourage IPOs to allocate a larger share of new shares to local retail investors. These efforts aim to boost domestic participation but have been linked to weaker IPO performance.

The regulatory environment is also shifting to attract international capital. Authorities have lifted restrictions on foreign investment in the equity market, signaling a move to broaden investor bases. However, geopolitical and economic uncertainties continue to challenge investor confidence.

What Are Analysts Watching Next?

The success of upcoming IPOs will depend on several factors, including valuation levels and investor sentiment. Market observers are closely watching whether the deals can generate enough momentum to boost volumes on the Tadawul. If the IPOs underperform, it could further dampen investor enthusiasm.

The PIF's role in these listings will also be a key factor. The fund is a major shareholder in several of the companies planning IPOs. Its participation could signal confidence in the market's long-term potential but may also influence pricing and investor expectations.

Overall, the IPO activity highlights the kingdom's ongoing efforts to diversify its economy and attract investment. However, the broader economic environment remains a significant challenge, particularly with low oil prices and geopolitical tensions affecting market stability.