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The GCC is on track to see continued strong performance in IPOs in the last quarter of 2024 despite geopolitical headwinds and challenging market conditions, say industry experts.
“We expect that we will continue to see very solid stories to come through for the rest of the year. I think the window is wide open, and we feel probably October and November will be extremely busy in the UAE as well around the region,” Samer Deghaili, Co-Head of Investment Banking - Middle East, North Africa and Türkiye, HSBC Bank Middle East Limited, told Zawya.
“Naturally, once you get to the national holiday and the school term ending around the second week of December, you would expect things will slow down. But the window is quite open from now,” Deghaili said.
The quarter has commenced with the UAE taking the lead with the upcoming IPO of the catering unit of Abu Dhabi National Hotels, which will list on the Abu Dhabi Securities Exchange (ADX) with a market capitalisation between AED 2.05 billion ($557 million) and AED 2.16 billion ($588 million).
UAE retail giant LuLu Group is also expected to open its IPO by the last week of October or early November with an ADX listing that is expected to raise between $1.5 billion and $1.85 billion, people familiar with the matter (who wished to not be named) told Zawya earlier.
Elsewhere, Saudi Arabia has raised the stakes following the listing of perfumer Al Majed for Oud Company’s shares on the Saudi Main Market from 7 October, with the final price set at SAR 94 ($25.05).
The kingdom’s Fourth Milling Company (MC4) is ready with its float of 162 million shares, or 30% of the capital, in an IPO on the Main Market, which opened subscription for its retail portion on 2 October.
“Directionally, we are going to continue to see a growth in volumes, new sectors coming into the exchange, like technology. We are also going to start seeing bigger deals again, because it goes in cycles; potentially [smaller] number of deals, but definitely bigger ones,” said Deghaili.
Delivery Hero, which announced a float for its Middle East subsidiary Talabat, could see a value between $12.9 billion and $15.1 billion as it heads towards a Dubai IPO expected later this year, according to an IFR report.
Meanwhile, Etihad Airways CEO Antonoaldo Neves said the UAE airline has been “working hard” to ensure the company is ready for a potential IPO while speaking at the Global Aerospace Summit in Abu Dhabi last month. And while Neves said that no decision has been made on a listing, it has been reported the potential $1 billion IPO could happen next year, according to sources familiar with the matter.
“Some of that IPOs have been deferred to next year, but to clarify, that is not because of the market is not receptive, or the market conditions are probably not there,” Deghaili explained. “They are postponing to next year because they realise their equity story would be much more appealing to investors on the back of material strategic developments.”
Looking ahead
Experts believe the region is poised to see an increase in the capital raised in the exchanges across core markets, namely the UAE, Saudi Arabia as well as Oman in the coming months.
“Oman is going to bring decent stories, some of them will be of a scale which is worthy of what you see in the UAE and Saudi – that is, $500 million, $700 million – and will bring more diversity into the regional exchanges,” he said.
Oman’s OQ Exploration and Production (OQEP) is already making headway with its IPO, which is expected to raise up to 780 million Omani riyals ($2.03 billion) on the Muscat Stock Exchange (MSX).
Deghaili added that there will also be a bigger theme around technology in the short to mid-term, with “several technology companies in the pipeline that could come to the market, but [which] are pretty much planning for next year.”
“We expect to see a lot of tech-type deals in the pipeline, with one leg in tech and one leg in other sectors which investors want to have exposure to, like education, healthcare, logistics. These are high on the investors’ agenda in terms of focus list, so we are going to keep seeing some of those come through the pipeline over the next 18 months,” he said.
According to Vijay Valecha, CIO at UAE brokerage firm Century Financial, the logistics business remains robust for future listings in the region, on the lines of what Delivery Hero is envisioning for Talabat.
“Reports suggest that the UAE online food delivery market is projected to hit $67.12 million by year-end, with a forecasted annual growth rate of 5.55% over the next five years, driven by growing consumer behavioural trends towards convenience,” said Valecha.
According to Valecha, tech companies will look at IPOs to leverage debt levels, fund extensive marketing campaigns and expand into newer regions to increase market presence and investments in newer technology.
(Reporting by Bindu Rai, editing by Seban Scaria)
