A new report by the Dubai International Financial Centre (DIFC) paints a promising picture for the IPO market in the Middle East and North Africa (MENA) region in 2024.

Despite ongoing geopolitical challenges, the Regional Outlook for Banking and Capital Markets report highlights a robust pipeline, particularly in Saudi Arabia and the UAE.

The report suggests Saudi Arabia will be the key driver, with 27 companies interested in listing on the Tadawul stock exchange. This includes anticipated follow-on offerings from giants like Aramco and Savola. The UAE also boasts a healthy pipeline, with listings expected from Parkin, Lulu Group, and Tabby.

The report credits government privatization efforts for boosting economic diversification, private sector development, and sovereign wealth creation. Dubai, for instance, has successfully privatized six out of ten planned entities, including Parkin’s highly subscribed IPO that attracted $71 billion in orders.

Family-owned businesses also leverage the IPO market to fuel growth, streamline succession planning, and enhance governance. 

Examples include Al Ansari Financial Services’ successful 2023 IPO and Spinneys’ recent listing on the DFM. Lulu’s upcoming IPO further incentivizes other family businesses to consider listing.

The report predicts a third wave of IPOs driven by exits from FinTech and tech-enabled startups. This will stimulate new, high-growth industries, offer investors exciting options, and provide VC firms with viable exit strategies.

While the overall outlook is positive, the report acknowledges that global economic stability and the recent performance of IPOs will significantly impact activity in 2024. Improved economic conditions could fuel market optimism, while factors like interest rates and volatility will influence sentiment later in the year.

Key figures interviewed for the report echoed these sentiments. Arif Amiri, CEO of DIFC Authority, emphasized the positive impact of IPOs on the region’s capital markets. Nadim Najjar, managing director for LSEG, highlighted the surge in IPO activity driven by government privatization programs and the growing interest from global investment banks.

The report also explores the debt market, predicting a slower growth pace in 2024 due to high interest rates and refinancing costs, mirroring global trends. However, governments are expected to remain active issuers to finance budget deficits, manage maturing debt, and fund development projects.