By Hassan Khatib *

It’s been more than seven years since our team at KPMG initiated the IPO readiness product which was fairly a new product in the Saudi market and it is safe and realistic to say that the perception of IPO in the Saudi market has significantly changed.

Until six or seven years ago and for most companies, IPO was purely a funding decision. When inquired about the IPO project and the key trigger behind the Company’s decision to list its shares, the common answer would be: to obtain funds that can be used to support working capital requirements and other business initiatives and projects.

Slowly and in light of the gradual and fast transformation that the Kingdom witnessed and which shaped all the life’s aspects in KSA, a new culture and mindset were born and companies started to contemplate and consider the IPO as a transformational journey expected to shape the administrative and business structure of any entity planning to go for the public market.

In the world of IPO readiness, there is a need to differentiate between two aspects which can be called: the “Black and White” and the “best practices”.

The “black or white” part is a checklist of prerequisites that the Company will not be allowed to go public without achieving. On the other hand, the “best practices” represent a set of rules and requirements that are not associated with specific CMA laws or articles, but need to be implemented to ensure the presence of a healthy, dynamic, and properly integrated entity that can successfully thrive through the listing process and perform up to the standards of a publicly listed entity.

Amid the active IPO market which KSA is currently witnessing, and the significant number of IPO readiness assessments being conducted correspondingly, we can tangibly notice the change in the mindset regarding the IPO.

Although the result (successful listing) is still the desired outcome, clients are starting to care more about the transformational journey. By now, they realize that although the additional funds and exposure that an IPO will bring are important milestones/goals, what is more, critical is the metamorphic wave that will hit the Company and transform every aspect of it to create a robust organization run by skilled individuals and managed through a rich and well-connected package of modern mechanisms and controls in line with the legal, administrative and governance requirements which a successful entity should have.

IPO for them is not a destination anymore, but a journey of challenges, improvements, and fun. 

* Senior Associate, Transactions & Restructuring KPMG Saudi Arabia

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