The IPO launched by Maaden, which is the second largest witnessed by the market after Inmaa Bank, has been received with a bourse decline of 0.94%. Maaden has launched 462.5 million shares, representing 50% of its capital, or SR9.2bn. Each share has been priced at SR10 as a nominal value with another SR10 as issuance fees, while the Saudi government will retain 50% of the company's shares.
According to Maaden's chairman, Dr Abdullah Al Dabagh, the IPO money will be used to finance new expansions, especially the bauxite projects as the company has already got a SR2.7bn loan to finance its phosphate development.
The Rasmala Investment report expected IPOs to continue to put short term pressure on the market before investors feel the positive benefits.
The report added that 'IPOs will continue to grab the attention of investors as the first IPO, for Halwani Brothers, was completed successfully fetching SR749.9m through 2.38 million subscribers, overwriting 437% of the original IPO'.
Analysts believe that new IPOs usually have a negative impact on the market as traders liquify part of their investment portfolios to be able to take part in the new launch.
The Saudi market opened with a slight decline after the banking sector fell by 1% while other sectors, including insurance, supported the index which closed down by 0.94%.
Analysts believe that the market was negatively affected by the new update of free floating shares.
Electricity share fell as a result of the decline in the number of floating shares traded, to 17.3% from 24%, while the weight of Mobily share rose as a result of the increase in the traded shares, to 60% from 40%, after the founders stake was sold by 20%.
Analysts believe that speculation on insurance shares pushed the index to register fewer declines.
Malath, Alliance, Saudi-Indian and ASIG rose to the maximum limit of 10% despite the decline of the market.
Leading shares in the banking and petrochemical sectors led the fall after all banks registered a decline except for SABB which rose by 1.3%.
Al Rajhi, Samba and Al Inmaa all fell sharply by 1.4%, 2.5% and 2.7% respectively.
All petrochemical shares fell, led by Sabic, except for Al Mutaqademeh and Safco which rose by 0.44% and 0.09% respectively.
Sabic fell sharply by 2%, Kayan by 2.9% (the day's biggest loser) and Petrorabigh by 1.6%.
The telecom sector fell sharply, including Zain by 1% and Mobily by 0.93% despite the announcement of the company that it has acquired 96% of Al Zajil International in a deal worth SR80m.
Saudi Telecom Company shares also fell by 0.80%.
Mohammed Al Mujael Group registered a strong rise, 4.5% after the company announced that it had won a deal worth SR1.5m from Aramco.