Several banks in Saudi Arabia are reportedly pressing the kingdom’s markets regulator to reconsider its push for larger retail allocations in initial public offerings, warning the policy could weigh on listing performance.
The banks are concerned about guidance encouraging issuers to allocate up to 30% of IPO shares to individual investors, warning the approach shifts too much stock toward retail participants at a time of subdued demand, Bloomberg reported.
The guidance, while not a formal rule, was first indicated late last year, suggesting retail allocations rise from roughly 10% to 20% to gain listing approval, according to Bloomberg sources. Executives also argue that higher retail quotas reduce allocations for foreign institutional investors.
Saudi Arabia opened its capital markets to all global investors from this month, removing long-standing barriers as the kingdom accelerates efforts to draw foreign money and deepen liquidity.
📌 Why it matters:
Increasing retail allocations could dampen IPO performance and limit foreign participation, slowing Saudi Arabia’s push to attract international investment into its equity markets.
📌 Bottom line:
Banks are pushing back on the regulator’s guidance, highlighting the tension between expanding local investor access and maintaining strong listing performance and foreign interest in Saudi IPOs.
