Saudi Arabia has been the region’s star performer in the initial public offering (IPO) market since the onset of the global economic crisis in September 2008.

The kingdom’s 11 IPOs and Qatar’s one issue were the only flotations in the GCC during 2009. This year, Saudi Arabia has accounted for seven of the Gulf’s eight listings that have closed to date.  

Even so, the Saudi IPO market has suffered considerably at the hands of the financial crisis. The number of companies going public is far less than had been expected.

An estimated 80 Saudi companies postponed public offerings worth a total of $19bn last year, according to the local NCB Capital, the investment arm of National Commercial Bank.

Furthermore, of the kingdom’s seven IPOs this year, four were mandatory due to the government’s regulatory requirements for insurance companies to list.

There are signs that there will be a modest pick-up in GCC IPO activity during the latter half of the year: Omani telecoms operator Nawras launched its IPO on 15 September, the first in the sultanate since July 2008, and Aluminium Bahrain and UAE-based retailer Axiom Telecom are also planning flotations before the end of the year.

But the long-expected flurry of IPOs from Saudi family businesses in the wake of the high-profile debt defaults at local conglomerates Saad Group and AH al-Ghosaibi & Brothers looks unlikely to materialise. It was widely thought a move to end the practise of name-lending among the kingdom’s banks would drive family firms – which make up the majority of Saudi corporates – to tap the equity capital markets.

Yet there is still a widespread reluctance among family firms to list; the chief deterrent being the greater transparency and scrutiny that going public demands.

Unless bank credit becomes difficult to access, the Saudi IPO market will continue to disappoint in the months ahead.