Saudi Arabia and UAE to dominate Mena IPOs in 2024

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• 29 Mena IPOs expected
• Aramco and Lulu to list
• Set to be ‘banner year’

Nearly 30 companies in the Middle East and North Africa plan to launch initial public offerings this year, despite mixed share price performance from many regional businesses that went public last year, a report has found.

Businesses from Saudi Arabia and the UAE will again dominate Mena IPOs in 2024, according to the report by consultants EY.

The view is shared by Vijay Valecha, chief investment officer at Dubai’s Century Capital.

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Saudi Aramco, the world’s third-largest listed company by market value, is considering selling further shares on Riyadh’s stock exchange. This follows the state-run oil producer’s $29 billion IPO in 2019-2020.

Abu Dhabi-based retail chain Lulu wants to sell $1 billion of shares in an IPO in late 2024, Bloomberg reported on Monday, citing unidentified sources.

“The 2024 GCC IPO market is poised for another banner year,” said Century’s Valecha.

“However, a word of caution: oil price volatility and a strengthening dollar against global currencies could impact investor sentiment. Be sure to focus on companies with solid financials and conduct thorough research before joining the IPO rush.”

He highlighted Saudi Arabia’s Avalon Pharma, which in January priced its IPO at the top of its range, as evidence of investor eagerness and regional companies’ ability to attract “significant capital”.

In Oman, OQ Gas Network, a subsidiary of national oil company OQ, sold 49 percent of its shares in an IPO that was 14 times oversubscribed and the largest offering in two decades.

Favourable market conditions and government programmes to part-privatise state-run companies, especially in Saudi Arabia, Oman and the UAE, will also help to drive IPO activity this year, Valecha added.

IPOs in the Mena region last year raised $10.7 billion in 2023, down 51 percent year on year, EY said. The number of IPOs also declined slightly over the same period to 48. 

Proceeds from flotations by companies such as Arabian Drilling ($712 million), Saudi Aramco Base Oil Co ($1.3 billion) and Americana Restaurants International ($1.8 billion) boosted the 2022 total.

“The Mena IPO market delivered a healthy number of IPOs across various sectors in 2023, despite the subdued global economic backdrop and the rising geopolitical tensions in the Middle East,” said Gregory Hughes, EY Mena IPO and transaction diligence leader.

The performance of recently listed companies has been mixed, according to EY.

Eleven of the 19 that went public in the final three months of 2023 made price gains on their bourse debt, meaning eight fell or ended flat in their first day’s trading.

From a longer-term perspective, shares in 26 of the 48 regional companies that completed IPOs last year ended 2023 at a higher price than that at which they listed, EY data shows.

Saudi Arabia’s Armah Sports Co was the biggest gainer, surging 72 percent in the period to December 31. Its stock is down slightly in 2024.

Of the 19 IPOs in the fourth quarter of 2023, 14 were in Saudi Arabia – and 12 of those were on the kingdom’s parallel market, Nomu, for smaller companies. The latter dozen IPOs raised $140 million combined, EY states.