The initial public offering (IPO) of Saudi Aramco has been officially postponed until 2021. In an interview in early October, Saudi Crown Prince Mohammed bin Salman bin Abdulaziz al-Saud confirmed that the listing is delayed, but added that the kingdom remains committed to privatisation.

While the delay may be a disappointment to some, the commitment to continue with Riyadh’s privatisation drive is broadly positive, and adds to earlier comments by the Ministry of Finance about the role the private sector is still expected to play in the kingdom’s economy in the future.

With a high-level commitment to privatisation in place, financial institutions in the kingdom are preparing for an uptick in IPO activity from next year, when five or six other state assets are expected to start listing. Financiers says these headline IPOs will create much-needed depth and liquidity in the market, and will encourage other private sector entities to list.

The trend will be strengthened further by the Saudi Stock Exchange (Tadawul) gaining MSCI Emerging Markets status and joining the FTSE Russell Global Equity Index. There have also been regulatory changes made by the Capital Markets Authority (CMA) aimed at increasing activity on the bourse.

As institutions move to capitalise on the upcoming IPOs, they will be hoping these changes are sufficient for a transformation in the Saudi equities market. The market is currently dominated by retailer investors that account for 80 per cent of investors in the market. If the market can attract more local and international institutional investors then it could be on the cusp of an expansive period of strong growth.