RIYADH: The trend of initial public offerings in the UAE and the Gulf Cooperation Council region will continue to remain strong, with more public and private sector firms taking this route, indicated an industry report.
According to a release from Mashreq Bank and the Middle East Economic Digest, the GCC, led by the UAE and Saudi Arabia, has experienced a surge in IPO activity in recent years, with companies raising billions of dollars.
Saudi Arabia maintained its leadership position for IPO issuances in the GCC last year, with 34 of the 48 public offerings debuting on Tadawul or Nomu.
However, the UAE dominated the total proceeds by raising about $14 billion from 11 issuances last year.
The IPO market continued to grow in the UAE amid strong investor demand, with 12 companies raising $11 billion in 2022, including the $6.1 billion offering from the Dubai Electricity and Water Authority.
“The March listing of DEWA was the largest GCC IPO in 2022, while state-owned Salik, Empower and Tecom collectively raised $2.2 billion in June, September and November, respectively. All of these indicate a concrete shift in mindset,” stated the report.
The Dubai government announced plans to list 10 firms on the Dubai Financial Market to raise the bourse’s market capitalization to 3 trillion dirhams ($820 million).
Additionally, according to the Securities and Commodities Authority, around 11 companies, including those operating in free zones, wish to list on the Abu Dhabi Securities Exchange this year.
ADX had a market value of 2.5 trillion dirhams at the end of 2022, making it the Middle East’s second-largest exchange after Saudi Arabia’s Tadawul.
“The opportunity to launch IPOs is currently stronger in the Middle East than in most parts of the world,” the report added.
However, sustained low oil prices since 2014 and the 2020 pandemic have taken a heavy toll on the GCC states’ fiscal positions, with many going into budget deficit for the first time in a decade.
The report further stated that last year was the best-performing year for the GCC since 2019.
