Markets

Stock prices of Gulf companies surge after IPOs

May 28, 2024, 4:09 AM

An investor at the Dubai International Financial Market. The share prices of four of the 20 Gulf companies that listed since early 2023 have at least doubled

18 of 20 companies show rise
Shares worth $11.2bn sold
Adnoc Gas was biggest IPO

Most Gulf companies that completed initial public offerings (IPOs) recently have seen their market capitalisation soar, with issuers pricing flotations adroitly to bolster investor demand for their stocks after listing.

From the start of 2023 there have been 20 Gulf IPOs that raised at least $100 million. Combined, these sold $11.2 billion of shares.

As of May 23, 2024 the share prices of 18 of these companies have increased since listing, with one flat and another – Investcorp Capital – down 11 percent.

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These gains are “related to the pricing that issuers set in order to leave some value on the table for secondary market investors,” said Faisal Hasan, chief investment officer at Dubai’s Al Mal Capital.

“The IPOs have been from good companies either backed by the government or by family businesses.

“Subscription levels were very high, so allocations were low and investors then went to the secondary markets to increase their holdings. That has helped support stock prices post-IPO.”

The share prices of four of the 20 companies have at least doubled. These include Saudi Arabian media conglomerate MBC and Adnoc Logistics & Services, a subsidiary of Abu Dhabi National Oil Co (Adnoc).

Adnoc Gas ($2.5 billion), Saudi Arabian energy company Ades Holding Co ($1.2 billion) and Abu Dhabi’s Pure Health ($986 million) were the biggest IPOs in terms of the amount of money raised in their flotations.

Adnoc Gas is up 30 percent since listing, Ades has gained 29 percent and Pure Health is 11 percent higher versus their IPO prices.

“We've seen a strong performance … in the IPO sphere in terms of local participation, whether it's institutional or retail driven,” said Marwan Shurrab, managing director of Alpha Advisory in Dubai.

Of the 20 IPOs, eight joined Saudi Arabia’s bourse, six listed in Abu Dhabi and three in Dubai. There were also two in Oman and one in Qatar.