A closer look at Saudi’s first e-commerce IPO

Welcome to the first edition of The Roadshow, a series that examines everything you need to know about MENA tech companies going public.

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Hi, friends 👋

One month ago, Nice One made history.

Debuting on the Tadawul Exchange, the beauty marketplace became the first e-commerce company to IPO in Saudi Arabia – ever.

The company debuted at the top end of its range, ~$9.33 (SAR 35), and catapulted 30% closing the first trading day at ~$12.13 (SAR 45.5).

Since then the stock continued to rise, eventually settling around ~$16 (SAR 60), reaching a market cap of close to $1.8 billion.

Reasonably enough, this performance has been used as further evidence that the demand for internet IPOs in Saudi is reaching a fever pitch.

Nice One’s IPO was heavily oversubscribed – the institutional offering by ~140 times, and the retail tranche by ~8 times.

This, along with the scorching debut of insurtech Rasan on Tadawul in June 2024 — surging by the same maximum permissible 30% on its first trading session and similarly oversubscribed 129 times — paints a picture of a very heated Saudi public market thirsting for tech.

How else do you explain a company with 28.4% gross margins trading at about 100x its earnings?

Despite the rather remarkable multiples, there are reasons for optimism. Outlined below are the three reasons Nice One is here to stay, along with a note of caution.

Before enumerating Nice One’s merits and weaknesses, it’s worth explaining what the company does.

Founded by brothers Omar and Abdulrahman AlOlayan in 2017, Saudi’s newest unicorn began selling beauty products on Instagram before launching its dedicated app, which now accounts for 95% of sales and has been downloaded more than 8 million times.

With a catalog of over 28,000 products from 1,200 brands, Nice One has quickly established itself as a go-to destination for beauty and personal care products in The Kingdom, commanding a 29% market share of a rapidly growing online beauty retail space.

It has favourable market dynamics

Nice One’s total addressable market is glowing – to borrow from beauty industry parlance. Domestically, the company pegs it at $13.6 billion, set to expand to $20 billion by 2028, growing at an 8% CAGR.

With 95.8% of revenue concentrated at home, it makes sense to drill down here first before opening up the prospect of greater GCC expansion…

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