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Screens within the Saudi stock exchange showing trading data. Image used for illustrative purpose.
A string of small and medium enterprises (SMEs) in Saudi Arabia has secured the kingdom’s Capital Market Authority’s approval this year to register and offer shares on the Nomu Parallel Market.
Among the latest are WinVeston Saudi Equity Quant Fund, Rawabi Marketing International Company, Wajd Life Trading Co., and Afaq Al Arabiya for Transportation & Storage Co.
Last week, Marketing Home Group Company, Qudra for Communications and Information Technology Co. and Hawyia Auctions Co. also won approvals to go ahead with a Nomu listing.
One of the main aims of setting up the alternative market was to increase the number of listed companies in Saudi Arabia. Total capitalisation for Nomu as of end 2024 was at 58.86 billion riyals ($15.7 billion). This compares with SAR10.2 trillion for the main market.
Nomu issuers can opt for direct listing and then sell shares on the exchange. The bourse saw 28 IPOs in 2024, while there three direct listings, according to the Saudi Exchange.
“Companies operating in the SME segment are encouraged to grow and are hence looking for financing and they are in turn resorting to both the debt (where the local banks are quite interested to provide support, especially under the government-sponsored Kafala programme) and the equity markets,” Sara Boutros, an analyst at CI Capital said.
The Nomu market is underpinned by Saudi investors, who account for about 96% of the free float. Of this, retail investors hold around 65%.
“Investors are always on the hunt for new investment ideas and for the ones who are more flexible on criteria including size and traded values, Nomu offers some interesting stories. We have also seen several companies migrating to Tadawul after they satisfy the requirements; which is also quite appealing to potential investors,” said Boutros.
In 2024, three companies transferred from the parallel market to the main, according to a bourse report.
Meanwhile, Riyadh’s main exchange has already seen four IPOs completed this year: Almoosa, Nice One, Derayah Financial, and Arabian Company for Agricultural and Industrial Investment (Entaj). The fifth, Umm Al Qura, a real estate developer, started trading on the main stock exchange on Monday.
A 2025 outlook by Saudi brokerage Al Rajhi Capital estimates the kingdom could witness between 50 to 60 IPOs over the next two years, with seven already approved or closed, while 97 IPOs remain under review.
(Reporting by Brinda Darasha; editing by Seban Scaria)
