GCCs IPO pipeline remains strong this year

The pipeline of initial public offerings (IPOs) for the GCC in 2023 shows potential for healthy activity for primary equity issuances in 2023 with the region ending 2022 as one of the few bright spots in global IPO markets.

According to analysts at Kamco Invest, IPO pipeline for 2023 in the region remains strong and based on estimates at the start of the year. It could range between 27-39 companies between announced and rumoured GCC IPO issuances.

The pipeline looks very strong as both governments and private companies are keen to sell equity while there is strong interest in the region.

Analysts believe that the boom of IPOs in the GCC is attributable to multiple factors, including solid economic fundamentals, market evaluation, compelling value proposition and change in perspective from international investors.

“While we expect the trajectory of interest rate hikes, geopolitics, secondary stock market volatility and oil price volatility to continue to remain risks in 2023, it is worth noting that the prevalence of these factors did not stop strong IPO activity in 2022. Further, the GCC will continue to generate interest for its strong idiosyncratic businesses and family office listings from international investors, given their strong competitive positioning and established reach in the market, in our view,” Kamco analysts said in their latest report.

The report noted that the total addressable market for the number of deals in 2023 is much higher than 2022 achievements, based on commentary from the region’s exchanges.

“However, issuers are likely to look at the secondary market for more conducive entry-points in terms of market stability, valuations, and could potentially employ a wait-and-watch approach in 2023 before going ahead with their IPO plans,” they said.

The region’s primary equity capital markets outperformed global peers in 2022, despite mixed secondary market performances across stock exchanges, as quality IPO issuers continued to achieve significant oversubscription for their issuances.

The UAE and Saudi Arabia were the most active IPO markets in the region last year both in terms of the value and the number of deals. According to EFG Hermes, out of $91 billion raised through IPOs worldwide, around $21 billion, or 23 per cent, were raised by GCC companies in 2022. This is a massive increase when compared to the previous year when GCC IPOs accounted for just two per cent, or $10 billion, of the global IPOs.

In the UAE as many as 12 UAE companies came to the market, raising $11 billion, in addition to the joint Abu Dhabi-Riyadh listing of Mena food franchisee Americana, which raised $1.8 billion. Dubai entities that went for IPO included Dubai Electricity and Water Authority, Tecom and Salik.

— issacjohn@khaleejtimes.com