Four Saudi companies have managed to attract initial public offering (IPO) orders worth 659 billion riyals ($176 billion).
Remarkable Performance
Bloomberg highlighted fund managers’ strong interest in Saudi stock sales, which have delivered nearly guaranteed returns over the past two years.
It added that the demand for new IPOs also impacts the local stock market.
The main market index, “TASI,” has fallen by about 8% from its peak in March, compared to its emerging market counterparts for the first time since the pandemic.
This decline is partly due to investors holding cash for IPO investments.
So What
The demand for recent IPOs has surpassed the record-breaking issuance of “Aramco” in 2019.
On the other hand, institutional investors placed orders worth 341 billion riyals for the 2.86 billion riyals IPO of “Fakeeh Care” this month.
Additionally, “SMASCO” received purchase orders worth 115 billion riyals, exceeding the available shares for fund managers by 128 times.
Meanwhile, “Rasan Information Technology,” one of the first fintech companies to go public in Riyadh, attracted orders worth 108.6 billion riyals for its 841 million riyals IPO.
The listing of “Miahona” Water Treatment Company was oversubscribed 170 times by investors, with orders reaching 94.4 billion riyals.
Some Context
The increased demand for IPOs in the Kingdom is attributed to the performance of its companies’ shares.
Seventeen companies’ shares jumped the maximum allowable limit of 30% on the first day of trading out of 61 companies that went public in the past two years, according to Bloomberg data.
More than half of these companies ended their first trading session above the offer price, with an average total return of 32%.
During the same period, IPOs in Europe raising at least $100 million achieved average returns of 5.2%.
