In a recent survey by global investment bank Goldman Sachs, over 50 percent of investors said they are willing to invest in initial public offerings (IPOs) in the last quarter of this year and the first quarter of 2024.
In particular, 41 percent of respondents indicated a “somewhat high” risk appetite. Meanwhile, an additional 10 percent stated that they have a “very high” risk appetite.
The Bi-Annual Equity Capital Markets Survey, conducted in September, involved various investors. These include mutual funds, family offices, pensions, hedge funds, crossover funds, and sovereign wealth funds.
IPOs on the rise
In recent years, the world has seen more companies turn to IPOs. These are a way for private entities to become public ones in a bid to attract investors and, in turn, raise capital.
“With IPO activity picking up since the start of September, our ECM (equity capital market) team has observed several key themes that are driving a more robust market: extensive early investor education differentiated go-to-market strategies, anchor investor support, strong financial profiles and thoughtful tactics to navigate a recovering market successfully,” noted Goldman Sachs in the report.
“As more issuers come to market, IPO activity will gradually become more consistent across sectors,” the report added.
In the Gulf Cooperation Council countries (GCC) region, member states are collectively seeing steady growth. In the second quarter of 2023 (Q2), at least 13 IPOs raised around $1.8 billion. This is according to a report by PwC.
Various factors contribute to this growth, including having active pipelines in both the public and private sectors. Increased investor awareness of the region’s potential also played a part.
Excluding the mega IPO of the United Arab Emirates’ state oil company, ADNOC Gas — which raised $2.5 billion in March — Q2 IPO proceeds were $1 billion higher than the previous quarter.
UAE and Saudi lead GCC
In 2022, the UAE and Saudi Arabia spearheaded the region in terms of IPO performance in the GCC.
Last year, Saudi was the frontrunner in terms of IPO issuances, with 34 out of the 48 public offerings debuting on the Tadawul or Nomu platforms.
On the other hand, the UAE ranked first in the region when it comes to the total capital raised. It secured around $14 billion from 11 issuances in the same period. The largest IPO last year was that of Dubai Electricity and Water Authority. In March 2022, it raised $6.1 billion.
In the bigger region of the Middle East, companies that listed IPOs raised a collective $4.8 billion. This is substantially higher than the $3.9 billion raised in Europe.
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