Before going through the IPO process, companies should ensure they have an effective internal control system, accounting standards, and corporate governance in place. This will help you move through the process smoothly and make it achievable in a shorter period of time.
IPO Requirements in Saudi Arabia and the Effect on the Local Economy
Saudi Arabia is the largest economy in the Middle East. With a population of over 30 million, it has a GDP of $1.56 trillion. Local companies will now be able to list their shares on the Saudi stock exchange TADAWUL by just paying a fee and not having to go through a lengthy process of getting listed abroad. This should result in more IPOs taking place as well as increased liquidity for stocks.
Saudi Arabia has been opening up to international and local investors since 2017 with its IPO requirements guidelines for the Saudi market. The country is looking to attract more investment from local and international companies by providing an opportunity for them to list their shares on Tadawul, Saudi Arabia’s stock market.
The Saudi Arabian IPO requirements will have a significant impact on the local economy. The requirements are designed to make it easier for companies to list on the Saudi stock exchange. This will in turn increase the liquidity of stocks, which should lead to more investment in the market. We will discuss a few of these requirements and how they may affect the local economy in Saudi Arabia.
There are a few requirements for listing on the market – your company should be a joint-stock enterprise, for starters. You also need to have at least 200 public shareholders for the Main Market and 50 public shareholders for the Nomu-Parallel Market.
The company needs to float at least 30% of its shares for listing on the Saudi Tadawul and 20% of the administered or issued shares, or a sum of money worth SAR 30 million of shares, for listing on a similar market.
What are the Benefits of Investing in an IPO?
IPO is an opportunity for investors to invest in a company that is about to go public. There are many benefits of investing in an IPO, such as:
– The return on investment is higher than the return on investment for private companies.
– Investors have the opportunity to make a lot of money if they invest early in the company and it does well in the market.
– Investors have the ability to participate in a variety of industries, such as retail, healthcare, and technology.
– IPOs provide investors with liquidity and diversification opportunities.
– Investing in IPOs allow investors to avoid holding stock that can be risky or volatile.
LOGIC’s Steps for A Successful IPO Journey, Go Public with Ease
The Saudi Arabian market is a unique and challenging one. The IPO journey has been a tough one for us with many challenges and obstacles.
We have learned from our experience that the best way to overcome this is by Following this 8-step journey for a successful launch in the global market.
Strategy: the journey begins with setting up a good strategy for the company and planning the company’s goals and strategic initiatives for its public launch.
Institutional Procedures: Design and activation of the organizational structure for the company to clarify the roles and responsibilities of each employee.
Operational Plan: The work plan requires a good structure of policies and procedures necessary to ensure the workflow in the company.
Financial Matters: Documenting everything is a necessity, this is why creating a financial model documenting all financial reports and lists to ensure a smooth process is a very important step.
Legalities: Ensuring that the company’s legalities match the market’s requirements and the government’s rules.
Governance: Design and implement governance practices
How to Measure the Success of an IPO?
The success of an IPO can be measured in terms of how much money is raised, how well the shares are traded on the market, and the valuation of the company when it goes public.
Several factors can lead to an IPO’s success or failure, like the industry it occupies, how the market is doing, how well it’s performing as a company, and its transparency about information. Most importantly, the success of a company’s IPO can depend on how the company has managed to reach the expectations put in before it went public. This means that matching those expectations is key to ensuring successful results. Sometimes a good company doesn’t get attention from investors when they are in their IPO or don’t invest many returns during the listing. Conversely, some companies see great interest from investors and have an IPO that is initially very successful. Research shows that one of the reasons for IPO failures has to do with inadequate planning. Therefore it is essential to make sure you thoroughly plan before initiating the IPO process.
Advising firms can help companies prepare for their IPOs and make a successful listing by providing insights into the mindset of investors. They can then help to chart the right path to success.