The IPO Boom in the UAE and MENA Region

• The stocks of Presight AI, a company specializing in data analytics and artificial intelligence surged 163% two days ago in its debut on the Abu Dhabi Stock Exchange having raised $496 milion
• In the meantime, Al Ansari Financial Services, a leading family-owned exchange company in the UAE with the largest branch network, raised $210 million two days ago as well; its major investor is National Bonds
• A couple of weeks ago, Adnoc Gas, a subsidiary of Abu Dhabi’s main energy company, also surged after raising $2.5 billion (the world’s largest IPO this year as it is)
• In December, Americana, the largest restaurant operator in the MENA region, raised $1.8 billion and became the first dual-listed company in the Saudi’s Tadawul and UAE’s ADX, the two largest stock markets in the Arab world
• In Q4 2022 alone, Abu Dhabi Exchange welcomed three listings—Americana, Burjeel Holdings PLC, and Bayanat AI PLC that raised a total of $14 billion

All of the above examples illustrate the latest IPOs in the Middle East, creating a dramatic contrast with the stagnant market in Europe and the United States. There are many reasons for such rapid development, including financial regulation reform, privatization underpinned by political stability, affordable oil and gas prices, no constant unrest, open economy benefits, a favorable trading window covering Asia and the United States, etc. This is especially evident if we take a closer look at the figures below.

• Investment EY: In 2022, 51 IPOs were launched in the Middle East and North Africa (MENA region). Record: $22bn was raised, up 179% YoY ► Saudi Arabia in Q4 alone had 13 IPOs and two direct listings. The UAE raised to the top with the largest IPO in the region in Q2, as Dubai Electricity and Water Authority (DEWA) managed to raise $6 billion.
• Global Private Wealth Association: Private equity fund managers invested $19.8 billion in 191 deals in the Middle East last year ► This is the only region in the world where we observed an annual surge in the investment cost against $600 million invested in 2018 and $15.2 billion in 2021

Prospects

• Under the watchful eye of ambitious Crown Prince Mohammed bin Salman, Saudi Arabia takes steps to make its economy less dependent on oil. 2019 marked the beginning of the IPO surge with the whopping $29 billion listing of oil giant Saudi Aramco. Market capitalization increased by about 475% in the course of the past five years. According to the figures from a regulatory institution, 269 companies are currently listed on the stock exchange as compared to 188 at the beginning of 2018, with another 80 getting ready for listing.

• The UAE aims to get financial groups on board and encourage them to join the international commercial hub in Dubai while launching a head-spinning number of Abu Dhabi listings. Following the example of the capital market recoveries of its neighbors, Dubai launched its own privatization campaign last year, having promised to list 10 state-owned companies. Four companies have already been listed, including Dewa service infrastructure company and Salik, Dubai road-toll operator. The country is now starting the “second phase” of the listing, with non-public companies going for the IPO in both Dubai (DFM) and Abu Dhabi (ADX). This includes family-owned companies which account for about 90% of the private sector. The companies that are now ready for IPOs are Majid Al Futtaim shopping mall conglomerate, Lebanese retailer Azadea, and Lulu hypermarket chain in Abu Dhabi.

• MENA continues to gain momentum, as we witness the first regional dual listing, partnership with international exchanges, a unified set of GCC ESG disclosure metrics and so on. However, it is yet to be seen whether the global outlook and lower-than-expected GDP forecasts will affect anticipated listings, despite the prospect of large IPOs organized with the support from the governments and private companies.

Here’s one thing I’d like to add. I moved to the United Arab Emirates two years ago, and I have to admit that both energy and dynamics here are very different from what you are used to in Europe. Rarely do we get to see such optimism among locals and expats, and a genuine urge to build something really big. International investors—high-profile managers of long-term assets—turn their focus to this country as they intend to scale up investments. You can already tell that the region is on the brink of something truly fascinating.