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Projecting for 2024: The Evolving Corporate Capital Market in Saudi Arabia

Projecting for 2024: The Evolving Corporate Capital Market in Saudi Arabia

PROJECTING

FOR 2024

The Evolving Corporate Capital Market in Saudi Arabia

Transition to Global Standards:

Nurturing Economic Growth

As Saudi Arabia propels forward on its path of economic diversification, the corporate capital market serves as a critical catalyst in this transformation. The year 2023 heralds a phase where the Saudi capital market aligns more closely with global standards, unveiling new products designed to spur growth. This alignment is poised to open promising avenues, especially as the Kingdom moves into the third quarter of 2023^1.

The unfolding narrative of Initial Public Offerings (IPOs) provides a glimpse into this evolution. The year 2022 saw a significant leap in Tadawul listings, a momentum that has moderated in 2023. However, the horizon remains lively with over 25 companies actively preparing for their IPO submissions as of the second half of 2023, signaling a continued vigor in market activity^2.

Regional Resilience:

GCC’s Capital Market Landscape

The broader canvas of the Gulf Cooperation Council (GCC) region also mirrors a resilient capital market scenario. Despite a global downturn in capital market activities since 2022, the GCC, inclusive of Saudi Arabia, exhibited significant IPO activity in Q1 2023, marking the second highest Q1 proceeds since 2015^3.

Reflecting back, the Saudi IPO market experienced a remarkable surge in 2022 with 41 primary listings, a significant uplift from the 12 listings in 2021. This upward trajectory was highlighted by notable listings such as the Saudi Aramco Base Oil Co.’s $1.3 billion IPO, which was oversubscribed 29.5 times. The encouraging market conditions of early 2023 suggest that the Middle East, led by Saudi Arabia, continues to be a fertile ground for capital market activities^4.

‎Corporate Sukuk Market:‎

‎Adventure in economic growth‎

Furthermore, Q2 2023 showcased active capital market endeavors within the UAE and Saudi Arabia, marked by notable issuances in the corporate Sukuk market, reinforcing the region’s growing aptitude in attracting capital and fostering economic growth^5.

These unfolding developments underscore a burgeoning corporate capital market in Saudi Arabia, well-aligned with the Kingdom’s Vision 2030 objectives of economic diversification and creating a conducive environment for both domestic and international investments. The ongoing initiatives and the robust IPO pipeline sketch a favorable trajectory, heralding a vibrant capital market landscape that caters to the domestic economic agenda while resonating with global market dynamics. Amidst this evolving scenario, the nuanced understanding and strategic guidance offered by legal advisors well-versed in both local and global market trends can be a valuable asset in navigating the complex regulatory landscape, ensuring businesses are well-positioned to seize emerging opportunities in the capital market.

References

  1. Saudi Stock Exchange (Tadawul). (2023). Capital Market Overview. Retrieved from Saudi Stock Exchange website
  2. KPMG Saudi Arabia. (2023). Capital Markets Overview. Retrieved from KPMG website
  3. PwC Middle East. (2023). GCC Capital Markets Watch – Q1 2023. Retrieved from PwC Middle East website
  4. PwC. (2023). TransAct Middle East 2023. Retrieved from PwC website
  5. PwC Middle East. (2023). GCC Capital Markets Watch – Q2 2023. Retrieved from PwC Middle East website

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