Saudi Arabian firms have raised about $3 billion from new share sales this year, making it one of the world's hottest IPO markets. But a series of recent setbacks is threatening to take the sheen off that boom, Bloomberg's Laura Gardner Cuesta reports on Horizons Middle East & Africa.

Riyadh

Saudi Arabian companies have raised approximately $3 billion through IPOs this year, positioning the country as a leading global market for new share sales. However, recent events have dampened enthusiasm, including weak debuts such as United Carton, disappointing financial results, and rare instances of withdrawn listings on the parallel exchange. 

A hospital operator's IPO also saw low demand after undisclosed dividend changes, further affecting sentiment. While upcoming high-profile listings like Flying Us are drawing attention with strong initial demand, there is uncertainty about whether this will translate into sustained aftermarket performance. Investors are increasingly cautious about valuations, and companies may need to adjust expectations as the market evolves.

Saudi Arabia's IPO boom faces multiple challenges

Laura what's happening to sentiment in Saudi equity markets. Thanks Paul. Yes I mean as you mentioned the Saudi stocks have been among the weakest performers globally. And what we are seeing in the IPO markets is a rare week debut. So traditionally or at least in the past few months IPOs have been have had like one of the strongest listings and they tend to debut really strongly. But we saw a rare debut by United Carton a couple of weeks ago where the stock plummeted on debut and there were concerns around valuation. They've since then they've reported disappointing results. So that's hurt the stock even further. We've also seen two polled listings in the parallel exchange and no move. And this is also quite rare. We've seen a really busy April for normal listings but the performance has been pretty mixed there as well. So last week we saw two polled debuts there. And finally we've seen Saudi hospital operator which had the weakest level of demand that we've seen in recent Saudi listings after they revoked dividends that had previously not been disclosed in their IPO prospectus. So put together I think this paints a picture of shifting sentiment and one of what you like you said one of the strongest one of the busiest IPO markets in the world in recent years. So how about the future. What does this mean for upcoming IPOs in the kingdom. So everyone will be watching the listing of flying us. This is the biggest Middle Eastern listing so far this year. One point one billion dollars. And it's also the first golf listing in almost 20 years. So a very high profile deal. They got really strong demand around 100 times over subscription levels. But as we've seen this doesn't necessarily translate into aftermarket performance. So we'll see how that goes. Everyone will be watching that. And we've also got a few listings that could come before the summer. One of them has already been announced as a gym operator sports club and a few others that still have regulatory approval. And in conversation with bankers I keep hearing that the second half of the year is going to be extremely extremely busy. But the key question I think especially for investors will be valuations because I don't think they are ready to entertain lofty valuations at this point. So it's a conversation that companies will have to have with their advisors and in the book building. So we'll see.

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