The Scoop
Saudi Arabia’s stock market regulator is investigating the poor performance of recent initial public offerings, according to people familiar with the matter, and questioning the advice given by investment banks to companies selling stock.
The investigation has been underway for several months and covers IPOs going back to at least early 2025, the people said. The Capital Market Authority has requested detailed information from global and local investment banks on their discussions with clients and investors, and for records of decisions on how shares were priced, the people said. The regulator has also asked for information on which investors were allocated stock, and for data on subsequent trades by those investors.
Saudi companies raised $3.7 billion through share sales last year, more than the rest of the Gulf combined. Close to 100 companies are waiting to list their shares on the bourse, although no significant IPOs have closed so far this year.
The CMA is expected to report its findings to the government later this year, along with proposals on how to stimulate trading activity and unlock more market listings. It is not expected to recommend taking any action against banks or investors.
For years, buying into a Saudi IPO was close to a sure thing. Shares in government-controlled firms were priced cheaply as a way for the state to offer citizens the opportunity to benefit from a growing economy and economic diversification. Listings by private sector businesses also tended to do well. But that situation no longer holds. According to ANB Capital, 10 out of the 13 companies that listed in 2025 were trading below their IPO price in January this year.
The CMA scrutiny is a sign of growing concern that a weak stock market could hit the country’s efforts to raise money to fund its economic transformation plan and challenge the UAE as the region’s financial center.
The CMA didn’t respond to a request for comment.
Know More
Before the Iran war, the Saudi government had planned to sell shares in a raft of state-owned companies as a way of bankrolling new investments, at a time of budget deficits and lagging foreign direct investment.
The conflict derailed that plan, but the stock market was under pressure even before the war and the regulator had been working on measures to attract more investors. It fell more than 12% in 2025, and although it has risen by nearly 3% so far this year, no major new share listings have taken place. The country’s first big wartime IPO was scrapped in June, and bankers say there may not be any new deals this year, despite an extensive list of firms preparing stock offerings.
The equity market has long been used by the government as a tool to redistribute wealth, offering citizens the chance to buy underpriced shares that soar in value once listed. Yet recent offerings have disappointed. Budget airline flynas sold stock at 80 riyals a share in May 2025, for example, which quickly dropped after listing despite having attracted more than $100 billion in IPO bids from investors. Its stock had fallen to under 60 riyals a share long before the war with Iran destroyed demand for regional travel. Specialized Medical Company, which runs a chain of hospitals, sold shares at 25 riyals each in June 2025 but they now trade at less than 16 riyals.
Notable
- The Iran war has prolonged a Gulf-wide slump in listings that had already been apparent before the conflict, but a long list of potential deals across Kuwait, Saudi Arabia, and the UAE has prompted hope of a rebound later this year, Bloomberg reported.