(MENAFN) According to a report from Mashreq Bank and the Middle East Economic Digest, the trend of initial public offerings (IPOs) in the UAE and the Gulf Cooperation Council (GCC) region is set to continue, with more public and private sector firms taking this route. The report highlights that the GCC, led by the UAE and Saudi Arabia, has experienced a surge in IPO activity, with companies raising billions of dollars in recent years. Saudi Arabia maintained its leadership position for IPO issuances in the GCC in 2021, with 34 of the 48 public offerings debuting on Tadawul or Nomu. However, the UAE dominated the total proceeds by raising about $14 billion from 11 issuances last year.
The report notes that the IPO market in the UAE is continuing to grow amid strong investor demand, with 12 companies raising $11 billion in 2022, including the $6.1 billion offering from the Dubai Electricity and Water Authority. The report states that this indicates a concrete shift in mindset. The Dubai government has also announced plans to list ten firms on the Dubai Financial Market to raise the bourse’s market capitalization to 3 trillion dirhams ($820 million). Additionally, around 11 companies, including those operating in free zones, wish to list on the Abu Dhabi Securities Exchange this year, according to the Securities and Commodities Authority.
Despite sustained low oil prices since 2014 and the impact of the COVID-19 pandemic, the report suggests that the opportunity to launch IPOs is currently stronger in the Middle East than in most parts of the world. However, the report highlights that the fiscal positions of GCC states have been significantly impacted, with many going into a budget deficit for the first time in a decade. Despite this, the report suggests that 2021 was the best-performing year for the GCC since 2019.
The growth of the IPO market in the UAE and GCC region signifies a positive trend for the region's economies. The increase in IPO activity shows that companies in the region are seeking to raise capital to fund growth and expansion. The strong investor demand for these offerings suggests that investors are optimistic about the future prospects of these companies and the region as a whole. As the UAE and GCC continue to recover from the impact of the pandemic and low oil prices, the IPO market is likely to remain an important avenue for companies to raise capital and fund growth.
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