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GCC IPOs expected to flourish in the future, says report
The UAE generated $14 billion in the previous year through 11 issuances, whereas Saudi Arabia had the largest count of IPOs in both, the Tadawul and Nomu markets.
During the pandemic, Initial Public Offerings (IPOs) have become increasingly popular in the UAE and the Gulf Cooperation Council (GCC) region, with more public and private sector companies choosing to sell their shares on the public stock exchange.
According to a report released by Mashreq Bank and Meed, the trend of firms opting for IPOs is expected to continue as many more companies are likely to follow suit.
In recent years, the GCC has seen billions of dollars raised through IPO activities, with the UAE and Saudi Arabia taking the lead. While Saudi Arabia had the highest number of IPO issuances in the GCC in 2022, with 34 of the 48 IPOs debuting on Tadawul or Nomu, the UAE topped the charts regarding total proceeds, raising approximately $14 billion from 11 allotments last year.
By the end of 2022, the Abu Dhabi Securities Exchange (ADX) is projected to have a market value of Dh 2.5 trillion, making it the second-largest exchange in the Middle East after Saudi Arabia’s Tadawul.
Only in the last year, twelve companies in the UAE collectively raised $11 billion (equivalent to Dh 40.4 billion). The report highlighted that the largest IPO in the GCC in 2022 was the March listing of Dubai Electricity and Water Authority (Dewa), which raised $6.1 billion.
The report further noted that state-owned companies Salik, Empower, and Tecom raised $2.2 billion in June, September, and November, respectively.
According to the report titled “Driver of Change,” the strong demand from investors suggests that the flurry of IPOs in the UAE will persist in 2023, indicating a shift in mindset towards IPOs.
In line with this trend, the Government of Dubai has announced plans to enlist ten companies on the Dubai Financial Market to increase the bourse’s market capitalization to Dh 3 trillion (equivalent to $820 million).
Mohamed Khalifa Al Hadari, the deputy CEO of the Securities and Commodities Authority, revealed that approximately 11 companies, including those operating in the free zones, have indicated their interest in being listed on the Abu Dhabi Securities Exchange this year.
“The IPO programme is likely to continue beyond the year-end, as the UAE has a list of investment-grade institutions that are looking to tap into a widening pool of local and regional capital, underpinned by the aim of making state-held entities more efficient and with more diverse sources of funding,” the analysis stated. It added that from an IPO stand-point, 2022 was the best-performing year since 2019 for the GCC.