According to a new analysis from Kuwait Financial Centre (Markaz), the UAE was the best performer in terms of IPO (Initial Public Offers) value, generating USD 3.9 billion from four listings in the first nine months of 2023.
The overall value of GCC IPOs fell by 56% to USD 6.8 billion through 29 offerings from USD 15.6 billion through 30 offerings one year earlier.
The two flotations on the Dubai Financial Market (DFM) raised USD 200 million, while the listings on the Abu Dhabi Securities Exchange (ADX) generated the greatest revenues of USD 3.7 billion.
The ADNOC subsidiary ADNOC Gas raised USD 2.5 billion, surpassing Borouge, which raised USD 2 billion in June 2022, to become the most successful IPO on the ADX.
There were 23 IPOs at the Saudi Exchange (Tadawul), raising USD 2.4 billion. Proceeds decreased by 46% year over year.
During the first nine months of 2023, the Muscat Securities Market saw one initial public offering (IPO) with USD 244 million in total proceeds.
According to Markaz, the UAE anticipates 11 initial public offerings in 2023 that may raise USD 2 billion. Other companies that might be listed include OQ Gas Network, Mulkia Investment Company, and Lana Medical Co.
Worse Performance Than 2022
The IPO’s proceeds in the region were down 63% year over year (YoY). IPOs are expected to be down this year due to the banking crisis and fears of a recession, which has caused businesses to scale down their ambitions to go public and will likely result in fewer fees for investment banks.
Year-to-date IPO volumes were at their lowest point since 2019, despite a comeback in fundraising and block trading activity. According to data from Dealogic, the total amount raised by stock market flotations across the globe to date is close to USD 26 billion.
Several businesses have been forced to postpone the implementation of their flotation plans as a result of the underwhelming success of certain early IPOs notably that of German web hosting firm IONOS.
IPO volumes in the US increased by more than 50% from the fourth quarter of 2022, but they were still down 11% from the same period in 2022.
When businesses like Chinese sensor manufacturer Hesai Group and solar technology company Nextracker went forward with their listings in February 2023, IPOs briefly sprang back to life.
The energy transition sector was a success story for IPOs, and IPO bankers anticipate that the pipeline will continue to be strong in this sector.
Another promising region for listings was the Middle East, where several well-known companies floated their shares, notably the oil driller Abraj Energy in Oman and Adnoc Gas in the United Arab Emirates (UAE).
Chris Laing, who is in charge of HSBC’s ECM activities throughout Central and Eastern Europe, Africa, and the Middle East, stated that the Gulf region has so far escaped the jitters that have roiled European markets. As a result, Chris Laing expects to continue seeing IPOs coming out of nations like Saudi Arabia and the UAE.
Promising Future Ahead
The main drivers for the Gulf region’s IPO growth include government incentives, foreign investor interest and diversification efforts undertaken by the UAE and its neighbour Saudi Arabia.
Despite global economic uncertainties, geopolitical factors and oil price fluctuations, there has been a huge investment activity in the Gulf region’s non-energy sectors, as the region has refused to slow down its ambitious diversification efforts irrespective of the international economic outlook.
The UAE and Saudi Arabia are now playing a significant role in the IPO market, thereby collectively raising USD 7.35 billion from 35 IPOs.
The UAE accounted for 54.42% of the Gulf’s IPO value, while Saudi Arabia led in terms of IPO volume, with 26 offerings year till October 2023.
The region is anticipating a strong IPO pipeline fuelled by government incentives and foreign investor interest, with over 15 companies already announcing listing plans before the 2023 end.