The GCC Initial Public Offering (IPO) market witnessed strong activity in 2022 and surpassed the 2021 achievements, despite volatility in markets. Last year, the GCC recorded 48 IPO issuances compared to just 20 issuances in 2021.
Meanwhile, proceeds from GCC issuers in 2022 went up by more than 300 per cent to $23.38 billion from just $7.52 billion in 2021, based on data from Bloomberg and stock exchanges. The relative resilience and immunity to global geopolitical events such as the Ukraine-Russia war, which drove passive index flows and index compiler weightings in favour of regional stock exchanges in the GCC were some of the reasons why IPO markets in the region outperformed other geographies, Kamco Invest said in a report.
In 2022, Saudi Arabia maintained its leadership position for IPO issuances in the GCC, as 34 out of the 48 GCC IPOs debuted on its stock exchanges. The UAE, however, dominated in terms of IPO proceeds and types of IPO issuances, raking in almost 59.7% of the issuance proceeds at around $ 13.96 billion from its 11 issuances in 2022. Bulk of the issuances came from the government’s mandate to bring select state-owned enterprises to UAE’s stock exchanges. UAE also registered the two largest IPOs in the region in 2022 with DEWA ($6.1 billion) listed on the Dubai Financial Market and Borouge ($ 2.0 billion) on the Abu Dhabi Securities Exchange.
The pipeline for 2023 remains strong and the start of the year the pipeline could range between 27-39 companies between announced and rumored GCC IPO issuances. “While the trajectory of interest rate hikes, geopolitics, secondary stock market volatility and oil price volatility to continue to remain risks in 2023, it is worth noting that the prevalence of these factors did not stop strong IPO activity in 2022,” Kamco Invest added.
Further, the GCC will continue to generate interest for its strong idiosyncratic businesses and family office listings from international investors, given their strong competitive positioning and established reach in the market. Separately, regulators will look at the performance of the listed IPO vehicles such as SPACs and market maker funds that are aimed at improving liquidity and participation, before providing wider access to such products.