The Halal IPO Market: Saudi Aramco's Spinoffs and What's Next

The halal IPO market in 2026 is entering what might be its most active phase ever, and the Saudi Aramco spinoff program is only the most visible part of it. Between new listings on the Tadawul, IPOs from Malaysian and Indonesian Islamic financial institutions, and a growing pipeline of halal-friendly companies in Turkey and Pakistan, the next two years are going to add more Shariah-compliant investment options to the public markets than the previous five years combined. For halal investors who have been frustrated by the limited universe of investable companies, this is genuinely good news.

Let me walk through what is happening, what to watch, and what the implications are for halal portfolios.

The Aramco spinoff program

The biggest single driver of halal IPO activity in 2025 and 2026 is Saudi Aramco's ongoing program of spinning off and listing its various business units. Aramco's IPO in December 2019 was famously the largest IPO in history at roughly $29 billion. What is less well known is that the Aramco IPO was conceived as just the first step in a broader restructuring that would eventually bring multiple subsidiaries and divisions to public markets over a decade or more.

By April 2026, several of these spinoffs have already happened. Aramco Base Oils was spun off and listed in 2023. Luberef, which refines base oils, was partially listed earlier than that. Aramco Chemical Products was spun off in 2024. The pipeline for 2026 and 2027 includes potential listings of Aramco's drilling services business, its downstream retail business, and possibly parts of its trading and logistics operations. Aramco has also indicated interest in partial listings of specific oil and gas field joint ventures.

The significance of these spinoffs for halal investors is straightforward. Aramco itself passes most Shariah screens. The spinoffs, which inherit Aramco's balance sheet discipline and low use, generally also pass Shariah screens. Each new listing adds a meaningful company to the Shariah-compliant investable universe, and in aggregate, the Aramco spinoff program is adding hundreds of billions of dollars in market cap to the halal opportunity set over the next several years.

The other thing that matters about the Aramco spinoffs is that they are generally priced attractively. Saudi Arabia has an interest in making sure these IPOs trade well in the aftermarket because it wants to build institutional confidence in the Tadawul and in the broader Saudi privatization program. The pricing discipline creates real opportunities for investors who can get in at or near IPO pricing.

The broader Saudi IPO pipeline

Beyond the Aramco spinoffs specifically, the Saudi IPO pipeline as a whole is one of the most active in the world right now. The PIF (Public Investment Fund) has been actively preparing companies in its portfolio for IPO, including potential listings of Saudi Arabian Military Industries (SAMI), Roshn (the real estate developer), several large construction and infrastructure companies, and multiple consumer and retail businesses that PIF has been investing in over the last several years.

Some of these IPOs are going to be large. SAMI, if it eventually lists, could be a $15 to $25 billion valuation depending on market conditions. Roshn has been targeting a $10 to $15 billion valuation. The construction companies would individually be smaller but collectively significant. If even half of the current pipeline gets to market in 2026 and 2027, we are looking at something like $60 to $100 billion in new IPO issuance from Saudi Arabia alone over the next two years.

Most of this new issuance will be Shariah-compliant because the Saudi regulatory environment effectively requires it, and because the underlying businesses generally pass standard financial ratio screens. For halal investors building Tadawul exposure, this is a massive expansion of the investable universe.

The Malaysian and Indonesian pipelines

Beyond Saudi Arabia, the other two big markets for halal IPO activity are Malaysia and Indonesia, and both have significant pipelines developing.

In Malaysia, the pipeline includes several Shariah-compliant technology companies, plantation companies, and property developers. Bursa Malaysia has been actively encouraging Shariah-compliant listings as part of its strategy to maintain Malaysia's position as a leading Islamic finance hub. The Malaysian government has also been preparing several state-owned enterprises for partial privatization, and most of these would be compliant with AAOIFI Shariah standards.

The most interesting Malaysian development is in Islamic financial institutions themselves. Several Malaysian Islamic banks and takaful companies have been exploring IPOs or secondary listings, which would add to the relatively limited universe of public Islamic financial institutions available to investors. I expect at least two or three Malaysian Islamic financial institution IPOs in the 2026-2027 timeframe.

In Indonesia, the pipeline is different but also significant. Indonesia's Islamic finance market has been underdeveloped relative to the country's Muslim population, and there has been ongoing effort to expand it. Several Indonesian banks with Islamic banking subsidiaries have been exploring spinoffs of those subsidiaries as separate listed entities, which would significantly expand the universe of publicly traded Islamic banks. Several Indonesian consumer companies with strong halal positioning are also preparing for listings.

The Indonesian halal IPO pipeline is particularly interesting because Indonesia has the largest Muslim population in the world but relatively thin Islamic finance infrastructure. Every successful Indonesian halal IPO helps build that infrastructure and creates precedent for more activity.

The Pakistan and Turkey stories

Pakistan and Turkey are the two other markets worth watching for halal IPO activity, though for very different reasons.

Pakistan has significant unrealized potential in Islamic finance. The country has over 240 million Muslims and a growing middle class, but Islamic finance penetration is still limited. The Pakistani government has been pushing to accelerate the country's transition toward a more Islamic financial system, and part of that push involves encouraging IPOs of Shariah-compliant companies. Several Pakistani Islamic microfinance institutions have been considering IPOs in 2026 and 2027, which would be a meaningful expansion of the public markets opportunity set.

Pakistan's challenge is macroeconomic. The country has been through multiple currency and balance of payments crises in recent years, which has made international investors cautious about Pakistani assets. Any Pakistani IPO has to contend with the macro backdrop, and pricing is likely to be conservative. But the underlying fundamentals of the companies involved can be attractive for investors willing to take the country risk.

Turkey is a different story. Turkish Islamic finance has grown significantly under the current government, but Turkey also has its own macroeconomic challenges, including high inflation and currency volatility. Several Turkish Islamic banks and participating finance institutions have been considering IPOs, and the Turkish government has been encouraging Islamic finance development as part of its broader economic strategy. For investors who can handle the currency risk, Turkey offers exposure to a large Muslim market that is not available through Gulf or Southeast Asian listings.

What halal investors should actually do with all this

Here is my practical guidance for halal investors who want to position themselves for the IPO wave of 2026 and 2027.

First, build a core exposure to broad Saudi and Gulf equity markets through ETFs or actively managed funds. This gives you automatic participation in the major new IPOs as they get added to indices, without requiring you to evaluate each individual deal. For most retail investors, this is the best way to get exposure to the Aramco spinoff program and the broader Saudi IPO pipeline.

Second, pay attention to specific IPOs that look attractive and consider direct participation if your brokerage account gives you access. Not every brokerage allows individual investors to participate in international IPOs, but some do. If you have access and you see a specific deal that looks attractive, direct participation can sometimes deliver better returns than waiting to buy in the secondary market.

Third, do not chase IPOs just because they are halal. The same discipline that should apply to any IPO investment applies here. Look at the company's business fundamentals, the pricing, the use of proceeds, and the management team. A halal IPO at a bad price is still a bad investment. Shariah compliance is necessary but not sufficient for a good investment decision.

Fourth, think about geographic diversification. The Saudi IPOs are going to dominate the 2026-2027 halal IPO calendar, but concentrating your new money in Saudi exposure is not ideal from a portfolio construction perspective. Look for opportunities to diversify into Malaysian, Indonesian, or other geographies where the fundamentals look attractive, even if the deal sizes are smaller.

Fifth, be patient about waiting for seasoned trading before buying aggressively. IPOs are often volatile in their first few months of trading as the initial investor base rotates and the market finds a stable price. For most retail investors, waiting 3 to 6 months after the IPO and buying in the aftermarket is usually better than buying at the IPO price or in the first days of trading.

The longer-term picture

The halal IPO wave of 2026 and 2027 is not just about specific deals. It is about the fundamental expansion of the Shariah-compliant investable universe. When the universe is small, investors are forced to either accept concentration in a handful of names or to hold non-compliant alternatives. When the universe is large, investors can build properly diversified portfolios within Shariah constraints, which makes halal investing a more credible approach for long-term wealth building.

The Aramco spinoff program and the broader pipeline across Saudi Arabia, Malaysia, Indonesia, Pakistan, and Turkey are collectively going to add maybe $150 to $250 billion in market cap to the halal universe over the next two years. That is a meaningful expansion, and it comes on top of the continued growth of existing listed companies that already qualify for halal portfolios.

For individual investors, the practical implication is that halal portfolio construction is getting easier. You have more options, more diversification possibilities, more sector exposure, and more geographic breadth than you did even two or three years ago. This is the environment in which halal investing becomes a genuinely mainstream approach rather than a specialty category, and the 2026-2027 IPO wave is a big part of why.

If you are thinking about building or expanding a halal equity portfolio in 2026, this is a good time to do it. The opportunity set is the best it has ever been, and it is about to get meaningfully better. Pay attention to what comes to market, build your core exposure through broad ETFs, and stay disciplined about valuation. The next phase of halal investing is going to be defined by investors who can take advantage of this moment, and the foundation being laid now will shape the category for years to come.