Saudi IPO Surge with $763M Lead, Eyes HK Cross-Listings

Key Takeaway

• Saudi Arabia's Tadawul stock exchange anticipates a surge in IPOs, with over 60 companies applying or approved for listings, including a major $763.4 million offering.
• Saudi Arabia and Hong Kong explore financial collaborations, including cross-listing opportunities, as part of broader economic diversification and market enhancement efforts.
• HKEX sees a potential revival in its IPO market with 100 applicants ready to list, buoyed by regulatory support and a significant uptick in its benchmark index.

IPO Frenzy in Saudi Arabia

Saudi Arabia's stock market is witnessing a significant surge in initial public offering (IPO) activity, with more than ten companies already approved for IPOs and over 50 firms having applied for listings on the Tadawul stock exchange. Mohammed Al-Rumaih, CEO of Tadawul, emphasized the diversity of these upcoming IPOs, highlighting their variety in sectors, sizes, and stages of development. This wave of IPOs follows a recent burst of activity, including the notable offering from Dr. Soliman Abdul Kader Fakeeh Hospital, which aims to raise as much as 2.86 billion riyals ($763.4 million), marking it as the kingdom's largest IPO of 2024. The Tadawul index has seen a 4% increase year to date, reflecting a positive market response to these developments.

Hong Kong-Saudi Arabia Financial Collaboration

In a bid to strengthen their positions as global financial hubs, Saudi Arabia and Hong Kong are exploring deeper financial ties, including the potential for cross-listing companies on each other's stock exchanges. The Saudi Tadawul Group and Hong Kong Exchanges & Clearing Ltd. (HKEX) co-organized a conference to discuss these opportunities. This initiative is part of Saudi Arabia's broader Vision 2030 program, aimed at diversifying its economy and attracting more foreign ownership to its stock market. Meanwhile, HKEX is looking to revive its IPO market, with CEO Bonnie Chan expressing optimism about the return of significant listings, supported by recent regulatory and market improvements.

IPO Revival in Hong Kong

HKEX is witnessing a potential turnaround in its IPO market, with 100 applicants ready to list, according to CEO Bonnie Chan. This comes after a period of decline, with IPO proceeds in 2023 reaching a two-decade low. However, recent supportive measures from Chinese regulators and a 23% increase in the benchmark Hong Kong stock index since January have contributed to a more favorable environment for new listings. The exchange is particularly targeting specialized technology firms, having adapted its listing rules to accommodate these companies with a lower profit threshold.

Management Quotes

• Mohammed Al-Rumaih, CEO of Tadawul stock exchange:

  "We have more than ten IPOs approved but waiting for book building and dealing with the asset managers to determine listing and offering dates... And the good thing about those IPOs is not just the number but the diversity. So they are from different sectors, different sizes in different stage in their life cycle."