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RIYADH — Saudi Arabia’s main stock market has witnessed a rare development after Moutlaq Al-Ghowairi Trading and Contracting Co. (MGC) withdrew its planned initial public offering despite completing the institutional book-building process and securing full coverage at the top of the indicated price range.The company had planned to list 30% of its share capital on the Saudi Exchange’s main market.MGC decided not to proceed with the offering after completing the institutional subscription process, even though qualified investors subscribed multiple times over at the upper end of the price range.Pressure on valuations after listingThe decision differs from previous IPO cancellations in the Saudi market, which were largely linked to weak investor demand or incomplete book-building.In MGC’s case, institutional demand was sufficient to complete the offering, shifting attention to factors beyond the subscription process itself.Market observers believe the decision may be tied to concerns over the stock’s performance after listing rather than the success of the IPO.Investors have increasingly focused on the possibility of tighter monetary policy in the United States following stronger economic data, including labor market indicators.Because the Saudi riyal is pegged to the US dollar, changes in US interest rates can affect local market conditions through financing costs and investor return expectations.Higher bond yields generally increase the returns investors require from equities, putting pressure on company valuations and the pricing of new listings.Against this backdrop, MGC’s withdrawal may reflect caution about how the stock would trade in the secondary market if investors reassessed valuations under a more challenging financial environment.Multiple reasons behind IPO withdrawalsThe history of canceled IPOs in Saudi Arabia shows that companies withdraw offerings for a range of reasons rather than a single factor.Some listings have been canceled because institutional demand failed to meet required thresholds during book-building.Others were affected by market conditions, new material developments, acquisition offers outside the market, or the expiration of regulatory approvals before a listing could be completed.Last year, EFSIM decided not to proceed with its IPO after completing the order-book process, saying it would reassess its expansion and listing options without disclosing subscription details.Awazel also withdrew its planned IPO after book-building without publicly explaining the reasons behind the decision.Abdullah Al Othaim Investment represented a different case.The company received regulatory approval to offer 30% of its shares and had begun preparations for a public listing.However, the IPO was later canceled after shareholders received an off-market acquisition offer at a valuation higher than the proposed IPO price range.In other cases, material developments prompted companies to withdraw planned offerings. Arabian Contracting Services previously requested the cancellation of an approved IPO to evaluate new information that had not been reflected in its prospectus. The company later returned to the market and completed its listing successfully.Astra Food also canceled a planned offering after changes in its operating environment affected the company’s ability to support the valuation assumptions included in the IPO process.Meanwhile, some companies delayed or withdrew listings because of market conditions before returning to the market at a later stage. Others obtained regulatory approvals but never completed the process before those approvals expired.A new signal for Saudi IPOsMGC’s decision highlights how a successful institutional subscription is no longer the sole factor determining whether an IPO proceeds.Companies and selling shareholders are increasingly focused on post-listing performance, market conditions and the ability of a stock to maintain its valuation after trading begins.For Saudi Arabia’s capital market, the withdrawal serves as a reminder that strong demand during book-building does not automatically guarantee a listing if companies believe secondary-market conditions may not fully support their targeted valuation.
