The MENA region, and particularly Saudi Arabia, are thriving despite a slowdown in IPOs in developed markets like the United States and Europe as a result of the global economic downturn and stock market volatility.
According to consultancy firm EY, the Kingdom actually led the way in terms of regional listing activity during Q3 2022, raising $490 million in total proceeds from two listings on the main market and three on its parallel market.
Saudi Arabia has hosted 22 of the 33 listings seen in the region this year, with many of them attracting billions of dollars in demand. Most recently, utility Marafiq drew in $52.5 billion in orders for an $897 million share sale.
Within the next few days, the base oil division of Saudi Aramco, Luberef, expects to raise about 4.95 billion riyals ($1.32 billion) from its anticipated 30 percent initial public offering (IPO). In response to strong investor demand, the company set the final share price at the top end at 99 riyals ($26.4) per share.
The upcoming share offering by Luberef comes after Americana, a regional fast food operator, raised $1.8 billion at the end of November through a dual listing on Saudi’s bourse Tadawul and the Abu Dhabi Securities Exchange (ADX). The company’s shares increased 12.6 percent to 2.95 dirhams on the ADX and 2.6 percent to 2.75 riyals on Tadawul following their market debut on December 12.
The listings are a result of recent market reforms implemented by the Saudi government, rising oil prices, robust liquidity, and local investors’ interest in Saudi stocks. For example, Nomu is a parallel market that the country established for smaller businesses seeking access to the capital markets with less onerous listing requirements.
There are 18 approvals that will “materialize within the next three months” and more than 70 listing applications that are being reviewed by the bourse and the market regulator, Mohammed Al-Rumaih, CEO of the Tadawul stock exchange said.
In 2021, Saudi listed ACWA Power and Saudi Telecom Co.’s internet-services unit – both drawing overwhelming investor demand and surging by the daily limit on their first day of trade. Abu Dhabi has also seen an IPO boom, while Dubai has announced plans to list some 10 state-owned companies.
Abu Dhabi will likely host three more IPOs this year and at least 11 in 2023, an official said, continuing a trend that’s made the Middle East a bright spot in an otherwise dour market for new share sales.
A 5 billion dirhams ($1.36 billion) fund launched a few months ago to boost public listings has helped, the official said.
The fund has seen an influx of private-sector and family-owned companies that have sought government support as they prepare to list, he said.
Burjeel Holdings, which raised $300m last month, listed through the fund, which is also eyeing companies in industry, manufacturing, healthcare, and financial services, according to officials.