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Mon 2 May 2016 08:43 AM

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'Flurry of IPOs' expected in Saudi Arabia

Experts say kingdom could become one of the region’s most active IPO markets following the unveiling of the Vision 2030 economic reform plan

'Flurry of IPOs' expected in Saudi Arabia

Saudi Arabia is expecting an increasing number of initial public offerings (IPOs) in the coming years as it unveils its Vision 2030 economic reform plan.

It is thought that the kingdom could will become one of the region’s most active market for IPOs and private equity investment if government plans to boost the economy are successful.

Experts scheduled to speak at a conference in Saudi Arabia this week cited projections from the kingdom’s Capital Market Authority (CMA), estimating that the Tadawul stock exchange will grow to 250 listed companies over the next seven years, up from 170 at present.

Representatives from Derayah Financial, Almarai, QNB Capital, NCB Capital and Albilad Capital are due to speak at the Euromoney Saudi Arabia conference on May 3-4.

Tariq Al Sudairy, managing director and CEO of Jadwa Investment, said: “Despite some challenging recent quarters, we see positive signs ahead for the stock market.

“The announcement of the [Vision 2030] National Transformation Plan will reassure investors of the government’s commitment toward structural economic reform, helping the private sector to make more informed and confident investment decisions.

“We view this year’s Euromoney Saudi Arabia Conference as an important opportunity to discuss the transformative changes that are happening in the Kingdom of Saudi Arabia.”

An increase in the volume of IPOs – and, in particular, offerings such as the proposed listing of a stake in oil giant Saudi Aramco – is expected to drive significant growth, as  is the launch of a secondary market for SMEs.

It is thought that Saudi Aramco’s potential IPO of 5 percent of its value is facing complications, the Economist reported, citing comments from chairman Khalid Al Falih.

Falih was quoted as saying that due to the huge size of the IPO – Saudi Aramco is expected to be valued at $2 trillion – can only be handled by the largest stock markets such as those in London and New York.

This could lead to legal problems with “unintended consequences,” Falih said.

Meanwhile, Saudi Arabia has announced plans to increase transparency within its investment and capital markets, including introducing new requirements for companies trading on the exchange to submit information on ownership.