The GCC initial public offering (IPO) market witnessed strong activity throughout 2022 and surpassed its previous year's achievements, despite volatility in secondary markets, a report says.

The total number of IPOs from the GCC jumped to 48 issuances in 2022 from 20 issuances in 2021, as per Kamco Invest analysis. Proceeds for 2022 from GCC issuers went up by 3.1x to $23.38 billion from $7.52 billion in 2021, based on data from Bloomberg and stock exchanges.

IPO markets remained buoyant despite volatility in secondary market indices such as the MSCI GCC (H1- 2022: +1.2%, H2-2022: -7.5%) and oil prices (H1-2022: +55.1%, H2-2022: -30.9%), as issuers remained confident of their business fundamentals, communication to the market, and investor appetite for their issuances.

There were a host of other reasons why IPO markets in the region outperformed other geographies such as 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 favor of regional stock exchanges in the GCC, Kamco Invest said.

Debuts of marquee UAE names catapult GCC IPO proceeds; Saudi led IPO deals numbers

Saudi Arabia maintained its leadership position for IPO issuances from the region in 2022, as 34 out of the 48 GCC IPOs debuted on either the Tadawul or the Nomu. 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 DFM and Borouge ($2 billion) on the ADX. The Saudi Exchange and UAE’s ADX also witnessed the IPO and dual listing of Americana Restaurants on its exchanges raising a combined $1.8 billion.

Global IPOs nose-dive 45%

IPO markets globally plunged in 2022, after the Covid-19 vaccine rollout optimism, rebound in global economic activity, stimulus-led liquidity, and strong stock market performance pushed global IPO markets to witness its best year in 20 years in 2021. Weaker secondary market performance, valuations and interest rate hikes impacted most global IPO markets as deals dropped by 45% y-o-y to 1,333 and proceeds plunged by 61% y-o-y to $179.5 billion in 2022, as per EY data.

GCC IPO pipeline for 2023 remains strong

The pipeline for 2023 remains strong and based on Kamco Invest's estimates at the start of the year the pipeline could range between 27-39 companies between announced and rumoured GCC IPO issuances.

"While we expect 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. 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, in our view. 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," Kamco Invest said.

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