Upcoming IPOs in the Saudi Financial Market: A Comprehensive Guide for Investors

The term "upcoming IPOs" refers to the anticipated offerings of shares from new companies or capital increases of listed companies through the issuance of new shares in the Saudi financial market (Tadawul). These IPOs are fundamental steps to achieve the necessary financing for corporate expansions or to implement their strategic projects, as well as contributing to enhancing transparency and increasing public ownership.

IPOs in Saudi Arabia are supervised by the Capital Market Authority (CMA), which imposes strict regulatory requirements, including the issuance of a detailed prospectus, ensuring that the company meets liquidity and solvency conditions, and the necessity of full disclosure of its financial status and future plans. This regulatory framework aims to protect investors and ensure fairness and transparency in the market.

With the acceleration of Vision 2030 efforts, IPOs have become one of the main tools to attract local and foreign investments, stimulating companies to develop and innovate. IPOs also provide opportunities for individual and institutional investors to participate in the ownership of promising companies, reflecting the development and regulatory maturity of the Saudi financial market.

The Saudi IPO market has witnessed notable changes during 2024 and 2025 compared to previous periods. According to reports from the Capital Market Authority, the market saw a decrease in the number of executed IPOs, with only two major companies listed in 2024, compared to eight companies in 2022.

Despite this numerical decline, the market is preparing for a recovery phase with expectations of launching major national companies in 2025, particularly in technology, renewable energy, and infrastructure sectors. The total value of new expected IPOs is estimated at around 3 billion riyals in 2025, reflecting a gradual return of momentum in offering activities.

On the other hand, individual investors have shown increasing interest in IPOs, driven by electronic subscription facilities and increased financial awareness. For example, the coverage ratio in one of the major banking IPOs exceeded 150% by the end of 2024. This trend reflects investors' confidence in the local market and their readiness to participate in new investment opportunities.

To participate in upcoming IPOs in the Saudi market, companies and investors must adhere to a set of regulatory conditions and requirements imposed by the Capital Market Authority. For companies, it is required to issue a comprehensive prospectus that includes details about the financial situation, capital structure, executive management, and future growth strategies. The company must also have achieved stable financial results and meet minimum liquidity and capital requirements.

As for investors, they should open a trading account with a licensed brokerage firm and provide the necessary liquidity to subscribe to the offered shares. The authority allows subscriptions for eligible individuals and institutions, with the necessity of adhering to the lock-up period that prevents the sale of subscribed shares for a certain period after listing, which is often six months in the Saudi market.

Through these requirements, the authority aims to protect investors, enhance transparency, and ensure market sustainability. Recently, it has launched simplified disclosure procedures for IPOs, facilitating the participation process and expanding the investor base.

The total volume of executed IPOs in the Saudi market during 2024 was approximately 1.2 billion riyals, with expectations to add around 3 billion riyals in 2025 through new IPOs. These anticipated offerings include startups in technology and agriculture, in addition to major national projects such as "NEOM" and "The Line," which are expected to have sections offered for public or partial subscription.

Recently, the market has shown a decline in the number of offerings compared to the peak activity during 2019–2020, attributed to global and local economic factors such as rising interest rates, investment caution, and changes in corporate trends towards alternative financing options. Nevertheless, indicators suggest a gradual return to activity, especially with the launch of the massive Vision 2030 projects.

From the investors' side, there has been an increase in the number of participants in IPOs, supported by awareness policies and financial education programs, in addition to electronic subscription facilities that enhanced accessibility and participation.

The cement sector is one of the essential industrial sectors in the Kingdom of Saudi Arabia, playing a pivotal role in supporting the construction and real estate sectors. Domestic demand for cement has reached about 35 million tons annually in recent years, with a slight decline due to a slowdown in construction projects and a halt in building permits in some areas.

However, the massive Vision 2030 projects, such as new cities and infrastructure, provide a strong incentive for future demand growth. The sector faces strong competition from local and international companies, in addition to pressure from cheaper cement imports from some neighboring countries. This has prompted Saudi cement companies to invest in improving production efficiency, reducing carbon emissions, and developing environmentally friendly products.

Key competing companies in the sector include: Arabian Cement Company (3008), Yamama Cement (1120), Tabuk Cement (3006), and Hail Cement (3001), along with other companies competing for market share and seeking opportunities for mergers or internal acquisitions to enhance efficiency and reduce costs.

Hail Cement Company (symbol: 3001) is a model of listed companies that reflect the dynamics of the Saudi stock market, especially in the cement sector. The stock of Hail Cement maintained relative stability during 2024, fluctuating between 14 and 16 Saudi riyals, and closed at around 15 riyals at the end of the year.

The company's market capitalization was approximately 1.2 billion riyals, with a price-to-earnings (P/E) ratio of 12–13 times, reflecting the stability of the company's profits supported by local construction projects. The company features an annual dividend distribution policy averaging 6% of capital (about 45 halalas per share), which exceeds the sector average.

Additionally, Hail Cement announced in August 2024 a financing agreement worth 100 million riyals to expand its plant, which will contribute to increasing production capacity by 20% during 2025. The company also indicated the possibility of increasing capital through the issuance of future rights shares, reflecting its ambitious strategy for growth and expanding market share.

The Capital Market Authority (CMA) plays a key role in regulating and developing the Saudi IPO market by establishing legislative and regulatory frameworks that ensure transparency and protect investors. These regulations include the requirement to issue a detailed prospectus, reviewing companies' financial statements, and determining lock-up periods on sales after the IPO.

In late 2024, the authority announced new amendments aimed at simplifying disclosure procedures and reducing the lock-up period for trading shares of subscribers to six months for some government companies. These measures aim to encourage companies to go public and attract more private investments, especially amid increasing regional and international competition.

The authority organizes awareness programs in cooperation with Tadawul and the Ministry of Investment to increase investors' awareness of IPO mechanisms, promote financial literacy, and facilitate individual and institutional participation in the primary market.

The share price in IPO processes is determined through in-depth financial studies conducted by specialized consulting firms, taking into account company valuation criteria, market conditions, and future performance expectations. In initial public offerings (IPOs), the share is often offered at a competitive price to attract the largest number of subscribers and achieve high coverage of the offering.

In rights issues, the price is usually close to the book or market value, with priority given to existing shareholders based on their ownership ratios.

The organizing committee for the IPO relies on the results of feasibility studies, the company's financial performance, and general market conditions to determine the final price. The price is usually announced in the official prospectus, detailing all information related to the number of shares offered, subscription conditions, and the subscription period.

IPOs in the Saudi market vary to include public IPOs (IPOs), private placements, and rights issues.

- Public IPO: This is the initial offering of a company's shares to the public, allowing any qualified investor to purchase the offered shares. This type is subject to strict regulations from the Capital Market Authority and requires the issuance of a detailed prospectus.
- Private Placement: This is offered to a limited group of investors (often institutions or strategic investors) and is not widely announced. It is characterized by quick execution and flexible terms.
- Rights Issue: This is available to existing shareholders in a listed company, granting them priority to purchase new shares issued by the company to increase capital. This type aims to maintain existing shareholders' ownership ratios and is often used to finance expansions or new projects.

Each type of these IPOs meets different needs and circumstances, whether for the company or investors, and requires careful reading of the official prospectuses and announcements.

Several factors influence the success of upcoming IPOs in the Saudi market, including:

1. Company Quality: The success of the IPO largely depends on the company's financial position, profit record, and future expansion plans.
2. Market Conditions: Economic confidence, trends in indicators, and available liquidity levels play an important role in attracting investors.
3. Regulatory Environment: A supportive and transparent regulatory environment enhances the likelihood of successful offerings.
4. Government Support: Government or official support for the IPO may increase confidence and attract more investors.
5. Competition and Investment Alternatives: The availability of alternative investment options such as real estate or bonds may reduce investor interest in IPOs, while thriving sectors like technology and renewable energy attract greater interest.

Analyzing these factors is essential for any company planning a public offering, and investors should review all details before making any participation decision.

To keep up with the latest news and opportunities for upcoming IPOs in the Saudi market, it is advisable to rely on official sources and trusted websites. The most prominent of these sources include:

- The Capital Market Authority (CMA) website: Provides official announcements about prospectuses, offering dates, and regulatory conditions.
- Tadawul platform (Saudi financial market): Displays data on listed companies, market news, and details of new IPOs.
- Specialized news websites such as "Argaam" and "Al-Eqtisadiah": Publish reports and analyses on company performance and upcoming IPOs.
- Company reports: Listed companies issue periodic publications about their financial results and future plans, often including indications of offering intentions or capital increases.
- Awareness and investment programs: Organized by the Ministry of Investment and Tadawul in cooperation with banks and financial institutions.

Relying on official sources ensures the accuracy of information and protects investors from rumors and misinformation.

The impact of new IPOs on the Saudi financial market is linked to several factors, including the size of the offering, the sector to which the company belongs, and the level of interest from investors. Major IPOs often contribute to activating liquidity, attracting new capital, and increasing market depth.

For listed stocks, IPOs may indirectly affect them, as some investors may shift their liquidity from existing stocks to subscribe to new shares in hopes of achieving higher returns. On the other hand, successful IPOs enhance investor confidence in the market as a whole, positively reflecting on performance indicators.

In some cases, large IPOs may lead to temporary pressure on the prices of some listed stocks, especially if they coincide with periods of weak liquidity; however, the effect often dissipates as the market stabilizes and balance between supply and demand returns.

The Kingdom of Saudi Arabia, under Vision 2030, aims to develop an advanced financial market attractive to local and international investments. In this context, upcoming IPOs are expected to play a pivotal role in financing growth projects, supporting startups, and enhancing transparency and governance.

With the implementation of major national projects such as "NEOM" and "The Line" approaching, interest in launching new companies or independent sectors for public offering is increasing, which will enhance the depth and diversity of the Saudi market. Government policies support this trend by providing a stimulating regulatory environment, support programs for small and medium-sized project financing, and electronic subscription facilities.

Despite challenges associated with economic fluctuations and global interest rates, indicators suggest a gradual return of momentum in IPO activities, with expectations of steady growth in the number and value of offerings in the coming years.

Despite the attractiveness of upcoming IPOs in the Saudi market, it is essential to exercise caution and not make investment decisions based on expectations or rumors. Investors should carefully read the prospectus, evaluate the company's financial performance, and understand the nature of the sector to which the offered company belongs.

It is always advisable to verify information sources and not rely on forums or rumors, and consulting a licensed financial advisor is crucial before making any investment decision. It should also be noted that IPOs carry risks, especially if the companies being offered are newly established or operate in volatile sectors.

Adhering to the lock-up period for selling shares after the IPO and understanding the offering conditions helps mitigate risks and achieve optimal benefits from available investment opportunities.