Saudi stock exchange CEO sees strong IPO pipeline in busy year

The slew of initial public offerings that’s made Saudi Arabia one of the hottest listings markets this year is unlikely to slow down, according to the chief executive officer of the country’s main stock exchange.

“What we’ve seen so far is great indications that this will not slow down in terms of pipeline,” Mohammed Al-Rumaih, CEO of the Tadawul stock exchange, said in an interview on the sidelines of Saudi Arabia’s Future Investment Initiative conference in Riyadh.

There are 18 approvals that will “materialise within the next three months” and more than 70 listing applications that are being reviewed by the bourse and the market regulator, he said.

The Middle East is having a banner year for IPOs on the back of high oil prices, investor inflows and strong demand for share sales. Saudi Arabia has hosted 22 of the 33 listings seen in the region this year, with many of them attracting billions of dollars in demand. Most recently, utility Marafiq drew in $52.5bn in orders for an $897m share sale.

Globally, however, macroeconomic risks have been stacking up, weighing on the listings market. The CEOs of JPMorgan Chase & Co. and Goldman Sachs Group both said on Tuesday a recession in the US and Europe is increasingly likely.

International interest
Al-Rumaih said there was growing interest from international investors in the Saudi market, with a 30 per cent increase in terms of the shares they own this year. The stock exchange has been on international roadshows to cities like London, New York and Singapore to highlight the appeal of the Saudi market, he said.

The bourse expects to see the first cross-listing this year, after encouraging companies to do so for years. Americana Group, the operator of KFC and Pizza Hut restaurants in the region, is planning a dual listing in Riyadh and Abu Dhabi this year in a first, Bloomberg News has reported.

Special purpose acquisition company listings – which exploded on Wall Street at the height of the pandemic but have since largely fizzled out – are also on the bourse’s radar, Al-Rumaih said, while stressing that the timing of such a new product needs to be carefully planned.

The Tadawul has also been introducing derivatives in order to boost liquidity and trading volumes on the stock exchange. In July, it introduced single-stock futures contracts, following the start of index futures in August 2020, as exchanges in the Gulf increasingly allow derivatives trading.

It is currently in the final stages of working on its third derivatives product which it hopes to announce this year, Al Rumaih said, without giving details.