The number of IPOs in the Middle East and North Africa region reached 51 in 2022, raising $22 billion, a 179% increase from 2021 rates.
Latest data from consultancy Ernst & Young, for the first quarter of this year, indicates success in Middle Eastern markets, led by the United Arab Emirates and Saudi Arabia, in maintaining the momentum of the proposals obtained over the past year, in which countries in the region have outperformed many countries. Owners of major economies whose markets have suffered greatly from the consequences of recent crises, as follows:
Markets in the region accounted for 16% of total IPO proceeds globally in the first quarter of the year. Companies in the region have raised approximately $3 billion and $400 million through 10 public offerings, the largest of which is ADNOC Gas’ offering in the Abu Dhabi market, which is the largest public offering first in the world since the beginning of the year. The M&A market also grew by 42% in the first quarter of the year, including 42 deals in the United Arab Emirates worth two billion dollars, and Saudi Arabia in second place. with transactions worth one billion and $700 million, then Kuwait with one billion and $300 million.
According to the Global Private Capital Association, private equity fund managers injected $19.8 billion into 191 deals in the Middle East last year, a region that is “the only place in the world that has seen an increase annual value of investments in 2022”.
good starts
Financial expert and economic analyst, Waddah Al-Taha, claims in exclusive statements to “Sky News Arabia Economy” that the year 2022 has been the year of IPOs par excellence in the Gulf region.
The markets of the Gulf Cooperation Council countries accounted for 21% of global subscription volume in 2022, compared to only 2% in 2021. He explained that the year 2022 saw a good start in the Abu Dhabi market, which greatly increased the market. value on this market, which was the best performance in the region in 2021, with an increase in its index of 68%.
During this year, the markets of the United Arab Emirates have seen record demand and strong demand from investors, sovereign wealth funds and local, regional and global investment portfolios and “Al-Ansari” for financial services, approximately $280 billion since the start of this year, while the four proposals have collected more than $3.95 billion in revenue.
In 2022, the markets of the United Arab Emirates also saw a series of quotations which were the strongest in the history of the financial markets, led by “Abu Dhabi Ports”, “Dewa”, “Borouge”, “GFH”, “Invictus Investments”, “Tecom” and “Union Cooperative”. Salik, Burjeel, Bayanat, Empower and Education.
Al-Taha says recent deals in the Gulf region have encouraged the strategy of issuing state-owned companies that raise the level of governance, transparency and corruption, pointing out that underwriting deals are the least expensive alternative. expensive to finance compared to other alternatives.
Based on this momentum, the economic analyst believes that the year 2023 will see more selection, not necessarily in the size of 2022 registrations, but it is important that there is more rigorous selection, in a way that is a real addition to the markets. and greater depth.
He adds: “It gives an edge to investors through governance processes, past financial statements, strong performance, as well as future distributions on a semi-annual basis, and this is a new addition that helps to strengthen IPO demand.”
Al-Taha believes that there are more potential offers for the rest of 2023, including public companies with a well-known history and good performance, adding: “Most importantly, in order to ensure strong performance for these offers, companies must be selected and the right timing of the offer must be chosen, and that the Pricing is acceptable. public offerings in the coming period.
Initial offerings in the UAE markets saw record demand and strong demand from investors, sovereign wealth funds and local, regional and global investment portfolios in the first quarter, reflecting the strength of the companies proposed. During the first quarter, six parallel market IPOs in Saudi Arabia generated total returns of $0.7 billion, in addition to listing a real estate investment fund with returns of 0.1 billion dollars.
New subscriptions
For his part, the economic analyst, Nayel Al-Jawabra, indicates in exclusive statements to the site “Sky News Arabia” that the current year 2023 should see more new subscriptions with which the markets evolve positively, citing what the ‘ADNOC Logistics The global company specializing in shipping and marine logistics services for the energy sector, an underwriting that has recently seen exceptional demand.
The ADNOC Logistics and Services IPO was the highest bid for an IPO globally so far in 2023. It is the second largest listing in the Middle East region. East and North Africa this year so far following the IPO of ADNOC Gas last March. Attracted total investor demand exceeding $125 billion. Overall, the supply exceeded the target value by 163 times, making it the highest level ever to exceed the target value of a price construction for an IPO in the UAE.
Al-Jawabra explains that this subscription request reflects that there is a continuous demand for these proposals, which are of great interest to investors, “especially if we are talking about these shares of governmental and semi-governmental companies, even if the eyes are largely focused on oil and gas stocks, which are very strong stocks.” “.
At the same time, he points out that it is also expected that there will be a new trend regarding the privatization of clubs, and therefore new proposals are expected in the sports sector in the Kingdom of Saudi Arabia.
And the Saudi Crown Prince, Prince Mohammed bin Salman, had announced the project of investment and privatization of sports clubs, to complete the objectives of Saudi Vision 2030 in the sports sector.
The momentum of theses
Economist, specializing in economic and administrative consultancy, Reda Musallam, says in exclusive statements to “Economy Sky News Arabia” that there is a noticeable tendency to offer part of the shares of subsidiaries of large holding companies in the markets of the Gulf, explaining that these offers would expand the size of the market, as is the case with the markets of the United Arab Emirates, with the offers of ADNOC, for example, in a way that helps to increase the market value of the market.
He added that these proposals attract wide investment opportunities, especially given the high profits, which attract foreign and local investors who have financial surpluses to invest in these companies, especially in light of the confidence in these businesses locally, regionally and internationally.
There are believed to be subsidiaries of public holding companies in the process of offering, indicating that the momentum of offerings in 2022 should continue in the current year 2023 at the same rate or perhaps exceed it .
He points out that the next step, according to him, is for family businesses to follow the example of public companies, especially since the former are powerful companies and giant names with huge financial surpluses and big projects.
A report by Britain’s ‘Financial Times’ newspaper quoted bankers as saying financial regulatory reform and political stability as oil and gas prices rose significantly last year from their lows at the time of the pandemic, lead to an increase in offers and private offers.
According to the report, recent IPOs in markets in the Middle East region, as well as IPOs that took place in Middle East markets last year, as well as upcoming IPOs this year, are all very significant signs confirming the fact that (the Middle East is on the radar of global investors, as it benefits from a boom in public offerings). .
This prosperity contradicts the course of European markets, which are suffering under the weight of the state of “uncertainty” which dominates them given the consequences of geopolitical developments and the resulting economic turbulence and challenges.
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