Saudi Arabia Rethinks IPO Rules as Investor Appetite Weakens

Saudi Arabia’s initial public offering market has cooled sharply in 2026, with just three companies — Dar Al Balad, Saleh Abdulaziz Al Rashed and MSGA — listing on the Tadawul and its parallel Nomu market so far this year to raise a combined $144 million. That haul is a fraction of recent years: companies raised $3.7 billion through share sales in 2025 and $9.8 billion in 2022, and the $144 million represents just 4% of the $3.53 billion raised through IPOs during the same eight-month period in 2025.

“I believe the proposed rules should increase accountability, improve disclosure, and strengthen price discovery,” said Osama Alowedi, founder and CEO of Riyadh-based asset management firm EQCM and former chief investment officer at SAB Invest. “This will help create greater discipline around valuation and help ensure that deals are priced more sensibly.”

Regulatory concern has mounted as post-listing performance has disappointed and liquidity has waned. Of the 17 companies that have gone public since 2025 on the kingdom’s main market, only four are trading above their issue price, Bloomberg data shows. That weakness, combined with valuation gaps between company owners and investors, has led to a pricing standoff: owners reluctant to accept market-ready valuations, and investors unwilling to pay up after a year of poor aftermarket returns.

• Listings postponed or delayed include planned IPOs from Mutlaq Al Ghowairi, Arabian Dyar and Kesay Clinics; six-month extensions granted to Alandalus Educational and Alromansiah have expired.
• The Capital Market Authority (CMA) has proposed that underwriting commitments take effect when book-building begins, meaning underwriters would be required to buy any shares unsold by investors — shifting execution and funding risk onto banks and institutional participants.
• The CMA also wants companies to disclose forward-looking statements, forecasts and financial performance indicators covering at least the following year to improve post-listing transparency.
• Other CMA steps this year include revising derivatives trading rules to attract foreign investors by cutting trading fees and appointing market makers to improve liquidity.

Market participants expect the proposed underwriting change to make underwriters and institutions more selective. “It could mean fewer deals in the short term, particularly for smaller issuers or offerings priced aggressively against current market multiples,” said Tahir Abbas, head of research at Oman-based Ubhar Capital. “In my view, that would be a reasonable trade-off if it results in better-priced IPOs, stronger aftermarket performance and greater investor confidence.”

The CMA has also signalled moves to channel domestic liquidity into Saudi assets: a recent circular reported by market participants asks public money-market funds to limit assets held outside Saudi Arabia to 5% within two years, a step that could free as much as $7 billion into domestic assets. Foreign ownership rules remain another constraint — non-Saudi investors are currently capped at 49% ownership of a Saudi company. Morgan Stanley analysts estimate that removing that ceiling entirely could attract about $7.4 billion into Saudi equities.

With market-makers, revised derivatives rules and tighter accountability demanded from underwriters and issuers, the immediate outlook is for fewer, more conservatively priced deals. Regulators and some bankers frame that as a shift from maximizing listing volumes toward building a more sustainable IPO market where the quality of demand and clearer disclosure underpin aftermarket performance.