Investors will greet Saudi IPOs -- and look to Aramco

Significance

Investor appetite for Saudi equities has been demonstrated in the huge over-subscription in the IPO of 20% of an internet affiliate of Saudi Telecom Company, which raised almost USD1bn. The Capital Market Authority has also approved Almunajem Foods Company’s request to sell 18 million shares, representing 30% of its capital.

Impacts

• The proceeds of the recent stock market flotations will be used to invest in new domestic and regional projects and acquisitions.
• The increasingly dominant Public Investment Fund (PIF) would be able to boost its finances through a fresh sale of Aramco shares.
• Despite the benefits of higher oil prices, there remains a risk that the current surge will damage global energy demand.