GCC bourses place for robust IPO activity on 2021

The amount of companies set to debut on Gulf markets is expected to increase this year as businesses queue up to list on markets in Saudi Arabia and the UAE, according to a study report by Kamco Invest.

“We expect GCC IPO market segments to remain active found in 2021, and there are numerous catalysts for believing so,” Thomas Mathew, assistant vice president of expenditure strategy and research at Kamco Invest, explained in the report.

“In conditions of sectors, newer consumer-linked businesses, with asset-light models that concentrate on digitisation, technology disruption and health care that gained business marketplace share found in 2020 from the impression of Covid-19, could search at raising capital for further growth and could warrant higher valuations. Federal government support can be driving a higher pipeline,” he added.

The GCC IPO marketplace remained active in 2020 regardless of the Covid-19-led market sell-off seen in early 2020. Even so, issuances picked up in the next half of the year.

The number of IPOs from the GCC on regional and international exchanges declined to seven in 2020, from 12 in 2019. Arises from GCC issuers both on regional and foreign exchanges slumped to $1.87 billion in 2020, from $29.04bn in 2019, according to Kamco Invest. The prior-year amount included the $25.6bn IPO of Saudi Aramco - the world's biggest currency markets debut.

The IPO marketplace in the GCC could have witnessed more significant activity in 2020, particularly in the first half, but issuers thought we would defer their primary industry entrances until secondary market segments recovered from the impact of Covid-19. This resulted in the backend-loaded issuances in 2020, while different issuers pushed their ambitions into 2021, the research note said.

Four out of the seven GCC IPOs debuted along the Tadawul STOCK MARKET, the largest Arab bourse. Saudi Arabia as well dominated with regards to IPO proceeds, accounting for 78 % of issuances at $1.45bn.

Qatar registered a primary issuance, with the IPO of QLM Lifestyle & MEDICAL CARE INSURANCE Company, which raised $178 million in December. The UAE re-entered regional IPO market segments with the report on Al Mal Capital Reit worthy of $95.3m.

Saudi Arabia's healthcare operator Dr Sulaiman Al Habib Medical Companies' public offering was the major IPO in your community this past year, with proceeds of $698.6m, followed by retailer Bin Dawood Positioning, which raised $585.1m through its share sale.

“Saudi Arabia should continue to the lead just how, with the amount of IPO applications in the pipeline reportedly in dual digits,” Mr Mathew told The National.

“For the UAE, the most crucial catalysts in 2021 are the start of the Nasdaq Dubai Growth Market for SME companies, and the impact of the Dubai Expo in H2 2021.

“UAE issuers who deferred their market debut in 2020 will probably consider 2021, but will come to be monitoring secondary market functionality and volatility, and the unwinding of the effects of Covid-19, like the efficiency of the vaccine.”

Global IPO volumes improved 15 % annually to reach 1,322 issuances in 2020, according to Ernst & Youthful. IPO proceeds rose 26 % in 2020 to $263bn, the highest level since 2010. The upsurge in IPO proceeds was motivated by a 69 % annual growth in sums raised by US corporations at $86bn, as the number of innovative issuances rose 32 per cent year-on-year to 222.

Issuance proceeds found in China, including Hong Kong, jumped by 51 % annually to $116bn. The amount of IPOs in the market grew 41 % to 514, EY explained. Europe clocked 9 % growth when it comes to IPO proceeds at $27bn and 17 % in the amount of transactions, to 176.

Technology raked in 35 % of arises from IPOs globally, and accounted for 24 % of most deals. Healthcare companies arrived in second with 16 % of proceeds and 15 per cent of volumes, EY explained in its report.

Specialized purpose acquisition companies were an increasingly popular IPO route on 2020 and witnessed a jump from 60 listings totalling $13.7bn of proceeds in 2019 to 230 listings garnering total issuance proceeds of $75.8bn in 2020, according to EY.

Globally, the two greatest issuances were from secondary public offerings, with Semiconductor Manufacturing International raising $7.5bn from its debut in Shanghai. JD.com followed using its Hong Kong listing and raised $4.5bn.