Nomu: Saudi Arabia's Parallel Market for Growth Companies Explained

Definition

Nomu (Arabic: نمو, meaning “growth”) is the parallel equity market operated by the Saudi Exchange (Tadawul), designed as a listing venue for small and medium-sized enterprises (SMEs) and growth-stage companies that do not yet meet the stringent requirements of the Tadawul Main Market. Launched in February 2017, Nomu provides an alternative path to public markets with simplified listing requirements, reduced compliance costs, and a qualified investor base that understands the higher risk profile of growth companies.

Nomu fills a critical gap in Saudi Arabia’s capital markets ecosystem — providing growth companies with access to public equity capital before they reach the scale required for a Main Market listing. For many Saudi companies, Nomu serves as a stepping stone: a company lists on the Parallel Market to access capital and build a public track record, then graduates to the Main Market when it meets the larger market’s requirements.

Market Design

Philosophy

Nomu was designed with a specific philosophy: to create a market that balances investor protection with the flexibility needed by growth companies. The market’s rules reflect this balance:

• Simplified listing requirements: Lower financial and operational thresholds than the Main Market, enabling earlier-stage companies to access public capital
• Qualified investors only: Trading is restricted to qualified investors who understand the higher risk profile of growth companies
• Reduced compliance burden: Simplified reporting and governance requirements that reduce the cost and administrative burden of being a public company
• Graduation pathway: Clear criteria for companies to graduate from Nomu to the Main Market as they grow

Listing Requirements

Nomu’s listing requirements are designed to be accessible while maintaining basic standards of corporate quality:

Investor Eligibility

Nomu trading is restricted to qualified investors, defined as:

• Institutional investors: Capital market institutions, government entities, supranational organizations, and investment funds
• High net worth individuals: Individuals with a portfolio value of at least SAR 200,000 (approximately $53,000)
• Professionally qualified individuals: Holders of CMA-recognized professional certifications (CFA, CISI, etc.)
• Employees of CMA-licensed persons: Under certain conditions

This restriction serves dual purposes: it protects retail investors from the higher volatility and risk associated with growth companies, while ensuring that Nomu-listed companies are evaluated by a more sophisticated investor base.

Listing Process

Step-by-Step

1. Engagement of a Nominated Advisor (Nomad): Unlike the Main Market, where the company engages a financial advisor, Nomu requires the appointment of a CMA-licensed Nominated Advisor. The Nomad guides the company through the listing process, assesses listing eligibility, and provides ongoing support after listing.

2. Due diligence and documentation: The Nomad conducts due diligence on the company, and the company prepares the required listing documents, including an information memorandum (a simplified version of a full prospectus) and audited financial statements.

3. CMA and Tadawul review: The information memorandum is submitted to the CMA for review and approval. Tadawul reviews the listing application for compliance with Nomu rules.

4. Offering and allocation: Shares are offered to qualified investors through a book-building or fixed-price process. The minimum offering size is typically smaller than Main Market IPOs, making it accessible for smaller companies.

5. Listing and first day of trading: The company’s shares begin trading on Nomu. The Nomad continues to support the company with ongoing compliance and investor relations.

Timeline and Costs

The Nomu listing process is faster and less expensive than a Main Market listing:

• Timeline: 4–9 months from engagement of the Nomad to first day of trading
• Total costs: SAR 2–8 million, including Nomad fees, legal counsel, auditor, CMA fees, and Tadawul listing fees
• Ongoing costs: Annual listing fees, Nomad retention fees, semi-annual reporting costs

Post-Listing Obligations

Reporting Requirements

Nomu-listed companies have simplified reporting obligations compared to Main Market companies:

• Semi-annual financial statements: Audited financial statements filed semi-annually (compared to quarterly for the Main Market)
• Annual report: An annual report including financial statements, board of directors’ report, and governance report
• Material event disclosure: Immediate disclosure of any material events that could affect the share price, consistent with CMA continuous disclosure requirements

Corporate Governance

Nomu’s governance requirements are streamlined:

• Board of directors: Minimum three members, including at least one independent director
• Audit committee: Required, with at least three non-executive members
• Internal controls: Basic internal control requirements, though less comprehensive than Main Market standards
• Related party transactions: Disclosure and approval requirements for transactions with related parties

Nominated Advisor (Nomad)

Nomu-listed companies must retain a Nominated Advisor at all times. The Nomad’s ongoing responsibilities include:

• Advising the company on compliance with Nomu rules and CMA regulations
• Reviewing material disclosures before publication
• Assessing the company’s ongoing suitability for listing
• Reporting to the CMA and Tadawul on the company’s compliance status

Market Performance and Statistics

Growth Trajectory

Since its launch in 2017, Nomu has grown into an active market:

• Number of listings: Over 80 companies listed (as of early 2026)
• Sectors represented: Technology, healthcare, industrial, consumer goods, financial services, education, real estate, and more
• Market capitalization: Growing steadily as new companies list and existing companies appreciate
• Trading volume: Increasing as the qualified investor base expands and awareness of Nomu grows

Graduation to Main Market

Several companies have successfully graduated from Nomu to the Tadawul Main Market, demonstrating the effectiveness of Nomu as a stepping stone. Graduation requires meeting Main Market listing requirements, including three years of audited financial statements, profitability, and a minimum market capitalization of SAR 300 million.

Notable Nomu-Listed Companies

Nomu has attracted a diverse range of companies, including:

• Technology startups seeking growth capital
• Family-owned businesses transitioning to public ownership
• Healthcare companies expanding operations
• Industrial companies financing capacity additions
• Financial services firms building scale

Advantages and Disadvantages

Advantages

For companies:

• Access to public equity capital at an earlier stage than the Main Market
• Lower listing costs and compliance burden
• Increased visibility and credibility with customers, suppliers, and partners
• Liquidity for existing shareholders
• Currency for acquisitions (publicly traded shares)
• A pathway to the Main Market

For investors:

• Access to high-growth, early-stage investment opportunities
• Potential for significant capital appreciation as companies grow and potentially graduate to the Main Market
• Diversification into smaller, less correlated companies

Disadvantages

For companies:

• Limited investor base (qualified investors only) reduces liquidity compared to the Main Market
• Ongoing compliance costs (Nomad, auditing, reporting)
• Market scrutiny and disclosure requirements that private companies do not face

For investors:

• Higher risk profile than Main Market investments (smaller companies, less track record)
• Lower liquidity (fewer investors, less trading volume)
• Limited analyst coverage and market information
• Price volatility (±30 percent daily limit, compared to ±10 percent on the Main Market)

Strategic Considerations for Companies Evaluating Nomu

Is Nomu Right for Your Company?

Nomu is most suitable for companies that:

• Need growth capital but do not meet Main Market listing requirements
• Want to build a public company track record before a Main Market listing
• Seek increased visibility and credibility in the Saudi market
• Have shareholders who desire partial liquidity without a full exit
• Are planning acquisitions that could be partially funded with publicly traded shares

Nomu may not be suitable for companies that:

• Are very early-stage with minimal revenue (pre-revenue companies face investor skepticism even on Nomu)
• Require very large capital raises (Nomu’s qualified investor base limits the size of offerings)
• Are not prepared for the transparency and compliance requirements of public markets
• Operate in sectors with limited investor understanding or appetite

Preparing for a Nomu Listing

Companies considering a Nomu listing should:

1. Engage a Nomad early: The Nomad’s assessment of listing readiness will identify gaps that need to be addressed before formal application
2. Prepare IFRS financial statements: At least one year of IFRS-audited financial statements is required
3. Establish governance structures: Appoint independent directors and an audit committee
4. Develop investor relations capability: Even on Nomu, effective communication with investors is essential for trading liquidity and share price performance
5. Build the growth story: Nomu investors are looking for companies with compelling growth trajectories, clear market opportunities, and capable management teams

Conclusion

Nomu has established itself as an essential component of Saudi Arabia’s capital markets infrastructure, providing growth companies with a pathway to public markets that would otherwise be closed to them. The market’s design — qualified investors, simplified requirements, Nomad oversight — strikes a balance between accessibility and protection that has enabled a diverse range of companies to access public equity capital.

For the Saudi startup and SME ecosystem, Nomu is transformative. It provides an exit pathway for venture capital and angel investors, a capital source for growth-stage companies, and a stepping stone to the Main Market for companies with larger ambitions. As the market matures and its track record builds, Nomu will continue to play a central role in the development of Saudi Arabia’s entrepreneurial economy.

Nomu Quick Reference

Nomu’s Role in the Saudi Investment Ecosystem

Nomu fills a critical structural role in Saudi Arabia’s investment ecosystem by connecting the private capital markets (VC, PE, angel investment) to the public markets (Tadawul Main Market). Without Nomu, growth-stage Saudi companies would face a binary choice: remain private (with limited liquidity options for early investors) or attempt a Main Market IPO (which requires three years of audited financials, profitability, and SAR 300 million minimum market cap).

Nomu bridges this gap by providing a public listing venue that accommodates companies with limited operating history, no profitability requirement, and a market cap threshold accessible to companies valued at SAR 10 million or more. This accessibility makes Nomu a viable exit pathway for venture capital investors who typically need liquidity within 5-7 years of their initial investment, which is often before the portfolio company could realistically meet Main Market requirements.

The market’s role extends beyond pure liquidity provision. A Nomu listing provides companies with enhanced credibility (the validation of CMA-regulated public market listing), access to public equity capital for growth (follow-on offerings), a publicly traded share currency for acquisitions, and increased visibility with potential customers, partners, and future investors.

For international investors, Nomu represents a rare opportunity to access growth-stage companies in one of the world’s most dynamic economies at valuations that may be significantly below what these companies would command on a larger, more liquid exchange. However, the qualified investor restriction, lower liquidity, higher volatility (30 percent daily price limits), and limited analyst coverage require that investors conduct their own thorough due diligence rather than relying on the institutional market infrastructure available for Main Market stocks.

Nomu vs. International Growth Markets

Nomu’s qualified investor restriction is its most distinctive feature compared to international peers. While this restriction limits liquidity, it also ensures a more sophisticated investor base that can better evaluate the risks of growth-stage companies — potentially reducing the speculative excesses that have affected some international growth markets.

As Nomu matures and its track record builds, the market will continue to play a central role in the development of Saudi Arabia’s entrepreneurial economy, providing the public market infrastructure that growing companies need to access capital, build credibility, and achieve scale. For international investors with emerging market growth mandates, Nomu represents a rare opportunity to access growth-stage companies in one of the world’s most dynamic economies at valuations that reflect the market’s relative youth and the qualified investor restriction that limits competition for the best opportunities.

Nomu Sector Composition and Listing Trends

The composition of Nomu-listed companies provides insight into which sectors of the Saudi economy are producing growth-stage companies ready for public market access:

Listing activity trends: Nomu IPO activity has accelerated since 2020, with the number of new listings increasing year over year as more Saudi companies recognize the market’s value as a capital-raising and liquidity platform. The average IPO size on Nomu ranges from SAR 20 million to SAR 200 million, significantly smaller than Main Market IPOs but meaningful for the growth-stage companies that list there. Several Nomu-listed companies have successfully graduated to the Tadawul Main Market after meeting the more stringent listing requirements, validating the market’s role as a developmental stepping stone in the Saudi capital markets ecosystem.

Investor considerations: Nomu’s qualified investor restriction means that individual investors must maintain a minimum portfolio of SAR 200,000, while institutional investors face no minimum threshold. This restriction filters out retail speculation but also constrains liquidity compared to unrestricted markets. Investors should size their Nomu positions with awareness that exit liquidity may be limited for less actively traded names.

Donovan Vanderbilt is the founder of The Vanderbilt Portfolio and publisher of Invest Riyadh. This glossary entry is for informational purposes only.