The decision by Mutlaq Al-Ghowairi Contracting Co. (MGC) and Arabian Dyar Real Estate Development Co. to postpone their planned initial public offerings (IPOs) on the Saudi Exchange (Tadawul) has refocused attention on the challenges facing the IPO market at present.
Investors remain watchful of developments in economic and geopolitical conditions, liquidity conditions, and their resulting impact on investment appetite.
These developments come at a time when the IPO market is lagging compared with last year. Since the beginning of the year, Tadawul’s Main Market (TASI) has seen only two listings, compared with 13 companies by the end of 2025.
The Nomu-Parallel Market, meanwhile, witnessed the offering and listing of 25 companies in 2025, while six companies cancelled their offerings for various reasons.
Weak Sentiment and Valuations
Chiradeep (Chiro) Ghosh, Head of Research at SICO Bank, said that weak investor sentiment is likely to have been a key factor behind the postponement of the two offerings.
He told Argaam that the valuation of Arabian Dyar appeared high and stretched under current market conditions, while MGC’s decision was more surprising, particularly given the strong interest shown by institutional investors toward the offering.
According to the head of research, it would not be surprising for both companies to make a comeback at a later stage when investor sentiment improves.
Geopolitical Risks Fuel Caution
Regarding the impact of geopolitical tensions, Ghosh explained that he does not expect these developments to have a major direct impact on either company. However, the broader implication lies in the heightened regional risk premium, which typically drives investors to rotate into defensive stocks and investments.
“While liquidity in the Saudi market has recently rebounded, an increased level of investor caution—particularly toward newly listed companies—remains a natural outcome given the current environment,” he added.
Why Have IPOs Slowed Despite Market Gains?
Addressing the slowdown in IPO activity despite the Saudi market’s YTD positive performance, Ghosh said the market’s outperformance had been driven mainly by Aramco and certain petrochemical companies and utilities, rather than by a broad-based rally across various economic sectors.
The real estate development sector, in particular, remains under pressure since last year, weighed by a number of regulatory measures. These include the implementation of idle land fees and rent-control policies, which have weighed on the valuations of companies operating in the sector.
A Strategic Decision Rather Than a Negative Signal
Ghosh believes that the postponed IPOs should not be viewed as a negative indicator for the companies involved, but rather as a strategic decision aimed at waiting for more favorable market conditions.
He further indicated that investors often comprehend companies’ decisions to delay listing plans when market conditions are unfavorable, especially if the companies prefer to preserve their target valuations instead of proceeding with an offering under market pressure.
IPO Momentum Remains Intact
Looking ahead to the second half of the year, Ghosh said that the Saudi IPO pipeline remains strong, though ongoing geopolitical developments will continue to influence companies’ decisions regarding listing timelines.
He noted that more than 40 companies had been considering listings earlier this year, including major companies such as Ninja and ArcelorMittal Jubail, pointing out that geopolitics will remain an influential factor in companies’ decisions on when to launch their offerings.
Ghosh also expected that companies that postponed their IPOs would resume their listing plans as soon as investor sentiment recovers and market conditions stabilize.
The decision by Mutlaq Al-Ghowairi Contracting Co. (MGC) and Arabian Dyar Real Estate Development Co. to postpone their planned initial public offerings (IPOs) on the Saudi Exchange (Tadawul) has refocused attention on the challenges facing the IPO market at present.
Investors remain watchful of developments in economic and geopolitical conditions, liquidity conditions, and their resulting impact on investment appetite.
These developments come at a time when the IPO market is lagging compared with last year. Since the beginning of the year, Tadawul’s Main Market (TASI) has seen only two listings, compared with 13 companies by the end of 2025.
The Nomu-Parallel Market, meanwhile, witnessed the offering and listing of 25 companies in 2025, while six companies cancelled their offerings for various reasons.
Weak Sentiment and Valuations
Chiradeep (Chiro) Ghosh, Head of Research at SICO Bank, said that weak investor sentiment is likely to have been a key factor behind the postponement of the two offerings.
He told Argaam that the valuation of Arabian Dyar appeared high and stretched under current market conditions, while MGC’s decision was more surprising, particularly given the strong interest shown by institutional investors toward the offering.
According to the head of research, it would not be surprising for both companies to make a comeback at a later stage when investor sentiment improves.
Geopolitical Risks Fuel Caution
Regarding the impact of geopolitical tensions, Ghosh explained that he does not expect these developments to have a major direct impact on either company. However, the broader implication lies in the heightened regional risk premium, which typically drives investors to rotate into defensive stocks and investments.
“While liquidity in the Saudi market has recently rebounded, an increased level of investor caution—particularly toward newly listed companies—remains a natural outcome given the current environment,” he added.
Why Have IPOs Slowed Despite Market Gains?
Addressing the slowdown in IPO activity despite the Saudi market’s YTD positive performance, Ghosh said the market’s outperformance had been driven mainly by Aramco and certain petrochemical companies and utilities, rather than by a broad-based rally across various economic sectors.
The real estate development sector, in particular, remains under pressure since last year, weighed by a number of regulatory measures. These include the implementation of idle land fees and rent-control policies, which have weighed on the valuations of companies operating in the sector.
A Strategic Decision Rather Than a Negative Signal
Ghosh believes that the postponed IPOs should not be viewed as a negative indicator for the companies involved, but rather as a strategic decision aimed at waiting for more favorable market conditions.
He further indicated that investors often comprehend companies’ decisions to delay listing plans when market conditions are unfavorable, especially if the companies prefer to preserve their target valuations instead of proceeding with an offering under market pressure.
IPO Momentum Remains Intact
Looking ahead to the second half of the year, Ghosh said that the Saudi IPO pipeline remains strong, though ongoing geopolitical developments will continue to influence companies’ decisions regarding listing timelines.
He noted that more than 40 companies had been considering listings earlier this year, including major companies such as Ninja and ArcelorMittal Jubail, pointing out that geopolitics will remain an influential factor in companies’ decisions on when to launch their offerings.
Ghosh also expected that companies that postponed their IPOs would resume their listing plans as soon as investor sentiment recovers and market conditions stabilize.
