IPO boom in GCC expected to continue in 2023

Muscat: The IPO boom in the GCC is expected to continue in 2023 and is expected to draw more investments than in 2022, which exceeded $20 billion, according to an industry expert.

The initial public offering (IPO) market in the Gulf Cooperation Council (GCC) saw a very good year in 2022, in particular in comparison to other regions, which recorded a dearth of listings and a pessimistic sentiment overall as doubts over global economic growth accumulated and interest rates rose, Bas Kooijman, CEO and Asset Manager of DHF Capital, said in an exclusive interview with the Times of Oman.

“The GCC benefited from governmental support and strong energy prices and the markets in the region saw some big IPOs and are expected to maintain this trend for 2023,” he added.

Elaborating about OQ subsidiary Abraj Energy's listing on the Muscat Securities Exchange (MSX) Bas said that the announcement of Abraj’s IPO has spurred interest in the Omani stock market, which is benefitting from the surge of investments that came from listings in neighbouring countries during 2022. “The IPO could also fuel a positive sentiment for the market as a whole and help push local stock prices to the upside. MSX could see a better year in 2023,” he further added.

Speaking about the IPO market in the GCC during the year Bas said, “Overall, the sentiment has been trending up with China reopening its economy and the US potentially decreasing the pace of interest rate hikes.”

This could further push companies in the GCC to speed up their IPO projects to tap the improving risk appetite among investors, he said.

“However, the extent of this boom could be exposed to changes in monetary policy, economic growth and investors’ appetite for risk,” he further added.

Bas said that 2022 saw a number of large IPOs, chief among them, DEWA, which raised $6.1 billion on the Dubai Financial Market (DFM). Other large IPOs in the UAE included Borouge, Salik and Empower. Saudi Arabia also saw a large IPO in Luberef.

Dubai is constantly finding innovative ways of incentivising business development and healthy growth, which leads to more companies achieving IPO eligibility, and 2023 could outperform last year's trends because of this, Bas said to Times of Oman. “The Saudi stock exchange has already announced that a large number of IPOs are in the works. In Dubai, Salik and Empower entered the emirate's stock market and we could see other government-owned organisations enter the market as well,” he added.

Bas said that it remains unclear which companies would be next in the IPO pipeline. “However, we could see some large government-owned companies in the UAE and Saudi Arabia opening their capital to investors, to break last year's trend. In the UAE, four free zone companies could list on the stock market,” he added.

Stock market investors face a number of risk factors including inflation, interest rates, the global economic slowdown and the ongoing conflict in Ukraine. In this regard, the US monetary policy remains a critical factor due to its large impact on sentiment, stock prices and global economic activity. As such, the main challenge for investors would be to target the companies most likely to thrive under current market conditions.