Conflict impacts IPO
Analysts warned of drop
Budget airline Flynas saw its share price drop on the first day of trading on Tuesday as the Saudi Exchange continued to slide following the outbreak of conflict between Israel and Iran.
It concluded the biggest initial public offering in the GCC this year, in which Flynas raised SAR4.1 billion ($1.1 billion), becoming the first airline to list on the Saudi bourse.
Despite initial hype around the offering – the institutional tranche was 100 times oversubscribed – it opened at 3 percent below its offer price of SAR80 and settled at SAR77.30 by market close.
Analysts had warned of a poor performance given the market conditions amid rising regional tensions. The Tadawul All-Shares Index, which tracks the main market, continued its decline after hitting a 20-month low on Thursday.
Analysts had hoped that 2025 would prove a record year for Saudi IPOs, with companies raising $2.8 billion in offerings already this year.
Aside from United Carton Industries Co., which saw its share price drop post-listing in May, all IPOs listed this year had recorded the maximum 30 percent gains allowed on the first day of trading.
“If we did not have this poor sentiment right now, I’m sure this would have been a similar IPO,” said Shahrukh Saleem, a portfolio analyst at Mashreq Capital, “especially given how the demand was at the time of book building.”
In its most recent earnings release, the company reported a 0.7 percent drop in its first quarter net income to SAR148 million. That was despite a 6 percent increase in revenue to SAR1.8 billion, year-on-year.
The airline operates 1,500 flights a week with an all-Airbus fleet, connecting more than 70 domestic and international destinations, according to its website.
Saudi Arabia hopes to achieve 300 million air passengers by 2030 and is investing billions of dollars in air infrastructure.
“The company seems good, the sector is good,” said Saleem. “For us, the name is still good.”
Other listed airlines in the Gulf, Kuwait’s Jazeera Airways and Sharjah-based Air Arabia, have declined in recent days as a result of the Iran-Israel conflict, but are still up by about a third year to date.
