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UAE IPO boom buoys GCC markets

The UAE witnessed the highest offering amount with a total value of $9.7 billion being raised through five IPOs, according to the GCC Equity Primary Offerings report from Markaz

A remarkable surge in companies going public in the UAE rendered a major boost to the GCC markets with 27 IPOs raising a total of $14.5 billion in 2022, reflecting an increasing buoyancy in investor confidence and business optimism.

Year to date, the UAE witnessed the highest offering amount with a total value of $9.7 billion being raised through five IPOs, according to the GCC Equity Primary Offerings report from Markaz.

Market analysts argue that the ongoing IPO boom reflects the new buoyancy across the region following the pent-up opportunities during the pandemic-hit years.

“The IPO wave is emblematic of the bullishness in the investment landscape with the regional economies riding a crest on the back of oil revenue windfall,” they said.

The Dubai Financial Market accounted for 67 per cent of total UAE equity primary offerings for the year with a total of $6.5 billion being raised in proceeds while ADX accounted for 33 per cent with a total of $3.2 billion being raised in proceeds.

Saudi Arabia saw the highest IPO volume, compared to its GCC peers, with 20 IPOs raising $4.5 billion in proceeds.

The UAE witnessed in April this year the largest IPO by value when Dubai Electricity and Water launched the $6.1 billion offering was the largest GCC IPO for the year and the biggest IPO for the region since Saudi Aramco’s 2019 offering.

As of August 31, 2022, Dewa constituted 42 per cent of total GCC IPO amount year to date. Borouge came in second after successfully listing on ADX in June 2022, making it the largest-ever IPO for Abu Dhabi. The company floated 10 per cent of its total issued share capital, raising a total of $ 2.0 billion which constituted 14 per cent of total GCC equity offerings year to date.

During the period from 2016 to August 2022, GCC markets witnessed a total of 90 IPOs with a total value of $55.9 billion. The year 2019 witnessed the highest value for IPO offerings with a total of $27.3 billion, out of which Saudi Aramco’s offering constituted 94 per cent of the total value offered in the year.

In the past seven years, the energy sector constituted 49 per cent of total GCC equity primary offerings raising a total of $27.7 billion in proceeds. The utilities and materials sectors follow with 14 per cent and six per cent respectively of total GCC equity primary offerings raising a total of $7.6 billion and $3.5 billion, during the same period.

Over the past seven years, Saudi Arabia’s stock market witnessed both the highest number of IPOs and the largest total offering amount among GCC stock markets, with a total of $38.9 billion of proceeds through 60 IPOs. It is followed by the UAE with a total equity primary offerings value of $14.5 billion through 11 IPOs.

– issacjohn@khaleejtimes.com