Middle East IPO drive likely to cool in second half of 2023

July 10, 2023

Traders at the Qatar Stock Exchange. The country's cryptocurrency legislation is expected early next year

Analysts do not expect this year to match 2022’s ‘astonishing record’
Q1 listings across region have fallen in number and value year on year
Oman, Qatar and Saudi expected to keep up IPO activity

The wave of listings on Middle East markets will slow down as the year progresses, with initial public offerings being pushed to 2024 instead, say industry experts.

Last year 71 IPOs were completed in the Middle East, for a combined transaction value of more than $25 billion, according to S&P Global Market Intelligence. That compares with $15 billion from 87 offerings in 2021.

“The number of IPOs launched in the Gulf last year set an astonishing record, making the region the global centre of ECM [equity capital market] activity,” said Akber Khan, acting CEO at Al Rayan Investment in Doha.

“While the pipeline in the coming three or four years remains bright, for 2023 to see a repeat of 2022 would be optimistic.”

Across the Middle East, there were 10 stock market listings with combined proceeds of $3.4 billion in the first quarter of 2023, according to the EY Mena IPO Eye report.

This was a drop in number (down 33 percent) and value (down 14 percent) compared to Q1 2022.

The market value of the UAE stock exchanges rose by AED220 billion ($59.9 billion) in the first six months of 2023 to AED3.4 trillion, boosted by higher demand from foreign investors and new listings.

These included Adnoc Gas, Presight AI and Adnoc Logistics and Services on the Abu Dhabi bourse, while Al Ansari Financial Services debuted on the Dubai Financial Market.

“We expect the IPO activity to moderate although we expect more IPOs to come out from Saudi Arabia,” said Shakeel Sarwar, head of asset management at Bahrain investment bank Sico.

Riyadh hopes to list more than 24 companies on its stock exchange this year, according to its regulator the Capital Market Authority.

Saudi’s First Milling Company raised $266 million (SAR999 million) in its IPO in May, which attracted bids worth SAR68.8 billion from investors.

ADES International Holding, the oil and gas driller backed by the kingdom’s Public Investment Fund, previously delayed its planned IPO to the second half of the year.

Saudi’s Milling Company 3 is planning an IPO next year and has invited banks to pitch for roles in the deal, Reuters previously reported.

“Importantly, the market view of when we get to peak rates is still a dynamic assessment and is feeding the uncertainty. This is a market challenge that we need to traffic,” James Palmer, Bank of America’s head of Emea equity capital markets, told Reuters.

Although Gulf IPOs have largely been dominated by the UAE and Saudi, experts believe markets in Oman and Qatar will witness activity from listing companies in the second half of the year.

In April Oman announced plans to float stakes in dozens of state-owned companies, following the success of similar programmes in Dubai and Abu Dhabi.

“We also expect Oman Oil and Gas Networks to be prominently featured in the IPO space during the rest of the year,” said Sarwar.