A wave of small-cap listings is expected in Saudi Arabia's equity market, with over 20 companies in the pipeline, raising concerns about inflated valuations amid tighter investor scrutiny. The move comes as the Saudi Exchange (Tadawul) sees increased activity despite macroeconomic pressures.
- Over 20 small-cap companies are preparing for IPOs on Tadawul in late 2025 and early 2026.
- Projected total capital raised from upcoming small-cap IPOs exceeds SAR 3.2 billion ($853 million).
- Valuation multiples for select pre-IPO firms have reached 20–25 times forward earnings, above the 12–15x average for the broader market.
- Tadawul’s small-cap benchmark index has outperformed the main index by 14% year-to-date, reflecting speculative interest.
- Regulatory bodies are reviewing disclosure standards for pre-IPO firms to ensure transparency.
- Institutional investor demand remains strong but selective, with focus on firms with clear revenue growth and operational track records.
Saudi Arabia’s small-cap segment is poised for a significant expansion, with more than 20 companies currently in the final stages of preparing initial public offerings (IPOs) on the Tadawul exchange. These firms, primarily in sectors such as industrial manufacturing, logistics, and technology-enabled services, are targeting total capital raises exceeding SAR 3.2 billion ($853 million) in the next six months. The flurry of activity marks a notable shift from recent years, when IPO volumes were subdued due to market volatility and cautious investor sentiment.