‎Elkuwaiz: Interference in offering prices limits IPOs, capital hike decision of companies with accumulated losses is in hands of their shareholders

‎Elkuwaiz: Interference in offering prices limits IPOs, capital hike decision of companies with accumulated losses is in hands of their shareholders

The Capital Market Authority's (CMA) previous setting on IPO prices and issue premiums limited the demand for listing, with companies refusing to offer their shares at a price they deemed lower than fair value, Rotana Khalejia reported, citing the market regulator’s Chairman Mohammed Elkuwaiz.

This is one of the reasons for low public offerings on the Saudi market in the past, he added.

Elkuwaiz noted that the companies whose shares fall below the subscription price immediately after offering are a minority, and represent nearly 20% of the companies offered.

Regarding companies with accumulated losses, the Chairman stated that the decision is in the hands of its shareholders, by supporting them by increasing (and reducing) the capital, or leaving them to face another battle, noting that preventing companies from increasing their capital, in general, by the regulatory authority is illogical as long as it’s their owners’ wish.

The capital hike value increased from SAR 500 million in 2019 to about SAR 5 or 6 billion in 2020 due to the repercussions of the Corona pandemic, when business, revenues, profits and even financing for companies stopped, and therefore companies resorted to shareholders, which was an advantage for the capital market, and a tool to attract other