Saudi IPO Pricing Faces Criticism

Financial market expert Mohamed Al-Omran criticized the pricing mechanism of initial public offerings (IPOs) in the Saudi market, considering it unfair and harmful to small investors. He stated that financial institutions estimate subscription requests non-critically, leading to inflated coverage and artificially high company valuations. These practices cause valuations to become inflated, and the stocks often experience declines after listing. He also called for stricter requirements for financial solvency and cash guarantees to protect investors and ensure fair pricing. Additionally, he pointed out that the Saudi market is influenced by external factors such as geopolitical tensions and rising interest rates. He expressed concern that some companies continue to grant bonuses to their boards despite incurring losses, which raises questions. He emphasized the need to enhance transparency and strengthen oversight to protect shareholders, as well as the importance of diversifying markets and boosting the competitiveness of the local market.

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