Saudi Arabia makes IPO demand prove it can pay

Saudi Arabia’s Capital Market Authority has put new IPO rules into force that aim to make the demand behind an offering more credible. During bookbuilding—the stage when institutional investors indicate how many shares they want and at what price—orders must now reflect cash or cash-like funds actually available, and investors must be committed to pay by the prospectus deadline. The underwriting bank must sign a binding agreement before bookbuilding starts and assume responsibility for buying the full offer from that point, while companies must disclose forward financial indicators extending at least through the next fiscal year. The changes are meant to make pricing less dependent on tentative demand and give investors a clearer view of both funding and forecasts.