Saudi leads ‘very healthy’ GCC IPO pipeline

Reuters/Faisal Al Nasser

• Mena region had 44% increase in IPOs in Q2
• 13 firms in region raise $1.8bn
• 23 Saudi companies plan IPOs on Tadawul in H2

The GCC remains an attractive region for IPO listings with Saudi Arabia leading a healthy pipeline of planned deals for the rest of the year and beyond, say experts.

The Middle East and North Africa (Mena) region recorded a 44 percent jump in listings during the second quarter.

By contrast, wider Europe, Middle East, India, and Africa endured a 12 percent contraction in IPOs.

Globally, numbers shrank by 5 percent.

• Saudi bourse owner’s profit dips 24% to $28m in Q2 2023
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• Middle East stock markets set to continue strong run of IPOs

Twenty-three Saudi companies have announced their listing plans on the Tadawul exchange for the second half of the year, consulting firm EY said in a new research report. 

Elsewhere, two companies in Egypt also intend to list.

Further public offerings are planned in the UAE, Oman, Qatar and Kuwait.

Gregory Hughes, EY Mena IPO and transaction diligence leader, described the prospects as “very healthy”. 

“We see planned activity across different sectors and from a combination of family business, state-backed enterprise and private equity stakeholders,” Hughes said.

“Mena has been a bright spot in the much more subdued global IPO market.

“We expect this to continue in the future, especially with international businesses also exploring listings in this region.”

According to the EY IPO Eye Q2 2023 report, activity in the Middle East and North Africa raised a total of $1.8 billion in proceeds from 13 IPOs.

Although this dropped by 80 percent year on year, the growth in the number of listings was driven predominately by Saudi Arabia and the UAE. 

Saudi Arabia dominated with four listings on the Tadawul main market raising $800 million, and seven IPOs on the Nomu parallel market raising $100 million. 

Jamjoom Pharmaceuticals Factory Company raised $336 million, the highest in the kingdom, followed by First Milling Company which raised $266.4 million.

Both offered a free float of 30 percent of the respective companies’ share capital and were oversubscribed.

Deregulation

In the UAE, Abu Dhabi Securities Exchange completed its largest listing of the quarter with Adnoc L&S raising $769.5 million. 

The IPO had the largest demand globally for a transaction so far this year, being oversubscribed by 163 times in aggregate – the highest for a UAE offering book-build.

On Dubai Financial Market, Al Ansari Financial Services was the UAE’s first family-owned company to be listed, raising $210 million in proceeds.

“The second quarter of 2023 confirmed that Mena IPOs are not experiencing the downward trend witnessed globally,” Brad Watson, EY Mena strategy and transactions leader, said. 

“The region continues to have strong economies and low debt. Coupled with the reform and deregulation in the region, it continues to be an attractive environment for new listings.”

During the first six months of 2023, the Mena IPO market registered a total of 23 IPOs, down 4 percent year on year, all of which were in the GCC with total proceeds of $5.2 billion.

The first half of 2023 recorded 615 IPOs worldwide with $60.9 billion capital raised, a decrease of 5 percent and 36 percent respectively.