EFG-Hermes said that the countries of the Gulf Cooperation Council dominated the global IPO markets in 2022, raising $21 billion.
Hermes said in a research note today, Monday, that the volume of IPOs in the region represented 23% of the total IPOs globally, amounting to $91 billion in the current year.
Hermes stated that this is a major achievement when compared to 2021, when the region represented only 2%, or $10 billion, of global subscription flows.
Hermes pointed out that the conflict between Russia and Ukraine aroused exceptional interest in investors in the Gulf region, especially investors who focus on emerging markets.
According to the memorandum, the four main Gulf countries – UAE, Saudi Arabia, Kuwait and Qatar – account for more than 7% of the total index MSCI for emerging markets. At the same time, volatility in global financial markets curtailed IPO activity outside the region, and Gulf companies were able to sell shares at high valuations..
UAE
The memo indicated that the real change came in the United Arab Emirates, where 12 companies entered the market in 2022, raising $11 billion in addition to the joint listing between Abu Dhabi and Riyadh of Americana Foods in the Middle East and North Africa, which raised $1.8 billion in late 2022.
The Dubai Financial Market witnessed the listing of Dubai Electricity and Water Company (DEWA) in March in the largest initial public offering in the Gulf states this year, raising $6.1 billion at an ideal time when the interest of global investors was rapidly shifting from Russia to countries in the region. The offering was more than doubled in size and 8.5 billion shares were sold at 2.48 dirhams each, up from the initial 3.25 billion shares.
DEWA is now the largest by market capitalization on the Dubai Stock Exchange. Investors were drawn to DEWA for its continued cash flow and profit-generating potential, and witnessed similar strengths in other major listings in Dubai in 2022, when Salik, Empower and Tecom collectively raised $2.2 billion in June, September and November. Straight.
All four companies were owned by the government, but 2022 also witnessed the inclusion of some important consumer-focused companies with an affiliation to the private sector.
Last month, the Dubai-listed education company, Taaleem, raised $205 million.
In the previous month, Abu Dhabi-listed healthcare operator Burjeel raised $300 million.
Hermes continued, “The Americana IPO was groundbreaking in many ways. The company was previously listed on the Kuwait market, but was acquired in 2017 for $3.5 billion. Among its new owners were Emaar founder Mohamed Alabbar, the Saudi Public Investment Fund and investors from Abu Dhabi. This year’s IPO was the first dual listing on the Saudi and Abu Dhabi stock exchanges, and the company was valued at $6.2 billion.
Hermes said that 2023 will be the year of change in the GCC countries. The currency peg to the dollar means that when the US Federal Reserve raises interest rates, central banks in the region must follow suit.
Local investors in the region face a trade-off: whether they stay invested in IPOs and the broader market, or they take some money off the table and put it in bank deposits. This makes it even more important for Gulf companies to attract foreign investors when they come into the market.
