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GCC Capital Markets Watch - Q4 2021

2021 overview

GCC

The GCC equity markets had an outstanding performance compared to 2020. The number of IPOs tripled from 2020 and the proceeds increased by approximately 369% bringing in USD 7.7 billion in proceeds. This remarkable performance is likely a result of the reopening of regional and global economies and changes in regional capital markets regulations and government incentives. The incredible performance of Q4 makes up for the quiet Q2. Saudi Arabia’s Tadawul leads the region, playing host to 57% of IPOs in the region by numbers in 2021 and generating 60% of the proceeds. The United Arab Emirates also had prominent activity and generated approximately 35% of proceeds in 2021 across its Abu Dhabi and Dubai exchanges. Other notable contributors include Qatar and Oman.

Top 3 GCC IPOs in 2021 by proceeds

International Company for Water and Power Projects
Exchange
Tadawul
Pricing date
11-Oct-21
Money raised
USD 1.2bn
ADNOC DRILLING COMPANY PJSC
Exchange
ADX
Pricing date
03-Oct-21
Money raised
USD 1.1bn
Saudi Tadawul Group Holding Company
Exchange
Tadawul
Pricing date
08-Dec-21
Money raised
USD 1.0bn

Top 3 GCC sectors for 2021 IPOs

Energy, Utilities and Resources

USD 3.3 bn
42% of total 2021 proceeds

Technology, Media and Telecommunications

USD 2.1 bn
27% of total 2021 proceeds

Financial Services

USD 1.6 bn
21% of total 2021 proceeds

Global

The remarkable IPO performance seen in the GCC market is also evident globally with the American and European region delivering returns in double digits. There were 2,682 IPOs globally in 2021 raising approximately USD 608 billion in proceeds. The number of IPOs and IPO proceeds nearly doubled in 2021. 2022 is expected to show strong economic growth although to a lesser degree. ESG related sectors are expected to be attractive to investors and ESG reporting will be an important part of value creation in IPOs. 

Although the Americas dominated with the highest number of IPOs, the EMEA region had the highest year on year growth and significantly improved from its 2020 position. This year has seen the highest IPO activity since 2017 across all regions. The technology and consumer discretionary industries ranked highest in terms of IPO activity accounting for 21% and 20% of the IPO activity respectively. Industrials, which accounts for 15% of IPOs, sits in the third position. Further Offer (“FO”) activity followed a similar trend and increased in 2021 compared to 2020. There were 4,015 FOs raising approximately USD 823 billion.

Top 3 global IPOs in 2021 by proceeds

Rivian Automotive Inc
Exchange
NASDAQ-US
Pricing date
9-Nov-21
Money raised
USD 13.7bn
Kuaishou Technology
Exchange
HKEX
Pricing date
29-Jan-21
Money raised
USD 6.2bn
Coupang Inc
Exchange
NYSE
Pricing date
10-Mar-21
Money raised
USD 4.6bn

Q4 2021

The GCC region saw a doubling of IPO activity in Q4 2021 compared to Q3 2021, going from 5 IPOs to 10 IPOs not including several direct placements and relistings. This is the highest number of IPOs in any quarter since the COVID-19 pandemic began. KSA led the region with 7 IPOs across its main and parallel markets, the UAE had 2 IPOs both in Abu Dhabi and the Muscat securities exchange in Oman had one IPO. This steady uptick in IPO activity quarter after quarter validates the consensus that post covid IPO landscape would be positively impacted post COVID.

  • USD 5.2bn

    raised from IPOs in Q4 2021 across the GCC compared to USD 585 million in Q4 2020

  • 10 IPOs

    across 3 countries in Q4 2021 compared to 1 IPO from 1 country in Q4 2020

  • USD 4.0bn

    bonds issued by the Government of United Arab Emirates in Q4 2021 on Nasdaq Dubai

  • USD 8.9bn

    sukuks issued by the Government of Saudi Arabia in Q4 2021 on Tadawul

Regional activity

Tadawal accounted for 70% of the IPOs in Q4 2021 generating a value of approximately USD 3.3 billion, about 63% of the Q4 IPO proceeds. The proceeds and number of IPOs have tripled since Q3 2021. The International Company for Water and Power Projects recorded the highest proceeds amongst all IPOs in the region in the year raising USD 1.2 billion. The Saudi exchange, Tadawul Group, had a USD 1.0 billion IPO in Q4 2021, making it the 3rd largest of the quarter. The Q1 2022 pipeline for KSA is strong. Tadawul has received 50 new applications from companies looking to list in 2022. and has already been host to a number of IPOs in 2022. Tadawul is currently drafting guidelines on SPAC listings, which could have further positive impact on its IPO pipeline. 

ADNOC Drilling Company PJSC and Fertiglobe listed on ADX in Q4 2021, raising USD 1.1 billion and USD 796 million respectively, bringing the total proceeds raised in the year on ADX to approximately USD 2.6 billion. 

It appears likely that the UAE will see an increase in IPO activity in 2022 driven by a number of initiatives - including ADX’s reduction in trading fees and increase in trading hours and the Dubai government’s announcement to list 10 of its companies on the DFM. Additionally, the UAE has moved its weekend to Saturday and Sunday to further align itself with the international markets. 

SCA has also issued SCA Chairman of the Board Resolution No. 1 of 2022 on the Regulations for Special Purpose Acquisition Companies (the SPAC Regulations). The SPAC Regulations allow SPACs to be listed on regulated securities markets in the UAE, with the ADX being the first UAE exchange to publish specific rules for the listing of SPACs. Such ADX listing rules, in conjunction with the SPAC Regulations, form the SPAC Framework, the first in the GCC region. SPAC activity has been predominant in the US markets and is increasingly popular amongst GCC companies.

Oman Reinsurance had a USD 6.8 billion listing on the Muscat stock exchange, the first reinsurance company to be established in the sultanate. This IPO is a direct result of the amendment to insurance law requiring existing licensed and reinsurance companies to be established as SAOG. There have also been reports that a number of local IPOs will follow in 2022 as companies look to capitalise on the rebound in crude prices.

Boursa Kuwait, despite having no IPOs, had some other types of listings. The relisting of AlSafat Investment Company K.S.C. and the private placement/secondary offering of Jassim Transport & Stevedoring Company K.S.C.C.

The debt market also saw increased activity in Q4 compared to Q3, with a substantial amount of debt listing in stock exchanges throughout the region. The number of bond listings more than doubled in Q4 2021. The sovereign debt listings superseded the corporate debt listings with the Qatari, KSA and UAE governments in the lead. The biggest sukuk issuer in Q4 2021 was the government of the Kingdom of Saudi Arabia, listing sukuks worth USD 9.0 billion. The KSA government has been very active in the debt market for the past years even during the COVID -19 pandemic. For the upcoming quarter, the Saudi exchange has approved USD 755 million worth of government debt instruments, submitted by the Ministry of Finance.

The UAE federal government took the lead in bond offerings raising USD 4.0 billion. This listing is a collaborative effort across the entire country and is not a common occurrence. It is more common for the respective emirates to list bonds separately.

Qatar had also been active in the debt market in Q4 2021. The Qatar government issued 3 bonds totalling USD 755 million and 9 treasury bills with a total value of USD 496 million. 

IsDB Trust Services had the largest corporate debt issuance in Q4 2021, issuing sukuks with a combined value of USD 1.8 billion.


GCC equity markets performance by cumulative total return since 1 January 2020

GCC equity markets performance by cumulative total return since 1 January 2020

Source: Eikon (Thomson Reuter), PwC Analysis


Share price performance of 2019, 2020 and 2021 GCC IPOs* by sector, relative to the respective all share index, from the IPO date to 31 December 2021

Source: Eikon (Thomson Reuter), PwC Analysis

The percentage figures shown in the chart above are the average share price movements of the newly listed companies under each sector relative to the index performance of the respective exchange.

* The IPOs of Al Moammar Information System Company and Sprinkle Holding BSC have been excluded due to insufficient data.
** The increase is mainly contributed by an increase of 1869% in the share price of Boursa Kuwait Securities Company (K.P.S.C.). If Boursa Kuwait Securities Company (K.P.S.C.) is excluded, the increase would be 33%.

Global IPO performance

Top 3 IPOs in Q4 2021 by proceeds

Rivian Automotive Inc
Exchange
NASDAQ-US
Pricing date
9-Nov-21
Money raised
USD 13.7bn
Global Founders Inc
Exchange
NASDAQ-US
Pricing date
27-Oct-21
Money raised
USD 2.9bn
Volvo Car AB
Exchange
Stockholm
Pricing date
29-Oct-21
Money raised
USD 2.6bn

Globally, 861 IPOs were completed in Q4 2021, a 68% increase in the volume of IPOs compared to Q3 2021. This brought the total number of IPOs and IPO proceeds (including SPACs) in 2021 to 2,682 and USD 608 billion, respectively. Compared to 2020, these correspond to a 90% increase in the volume of IPOs and an 84% increase in proceeds. 

In the Americas, 293 IPOs completed in Q4 2021 compared to 205 in Q3 2021. Proceeds in Q4 2021 totalled USD 83 billion, almost 50% up from the previous quarter. Compared to the rest of the world, the Americas comprised 51% of the total IPO proceeds in Q4 2021 (and 57% when considering the entire year of 2021). The Americas’ dominance in 2021 was driven by SPAC issuances,  of which the volume increased to 619 for the year from 250 in 2020, although they faced increasing scrutiny as the year progressed.

Asia-Pacific witnessed a significant increase in the number of IPOs in Q4 2021 from 235 in the previous quarter to 417. This was also accompanied by an increase in the proceeds to USD 52 billion from USD 39 billion in the previous quarter. Although IPO activity increased in Asia-Pacific in 2021, growth was not as strong as that seen in the Americas and EMEA. This is attributed to the regulatory changes in China as well as the uncertainty associated with the liquidity of the Chinese property market. Hong Kong was the only exception to the growth in the IPO activity seen in Asia-Pacific as a result of the tightening regulation and financial penalties on some tech companies.

In EMEA, the number of IPOs in Q4 2021 doubled compared to Q3 2021, reaching a total of 151, raising USD 27 billion in proceeds. In 2021,  EMEA witnessed a greater year-over-year increase in both the number of IPOs (178% increase) and IPO proceeds (268% increase) than the Americas and Asia-Pacific, amid a strong market optimism as economies were reopening. The most active sectors in EMEA (by proceeds) were technology, consumer, e-commerce, and financials.

Global IPO activity
Top countries by % of total IPO proceeds raised in 2021

Top tips

Liquidity is key - debt vs equity funding

As the vaccines roll out continue and global economies reopen, interest rates are on the rise,  which may impact the attractiveness of debt financing compared to during the peak of the pandemic and shifts the focus toward equity funding.

Be super ready

Although an increase in oil price would typically stimulate the regional economies, the cause of the current rise in oil price stems from global uncertainties. Companies which are interested in seeking financing from the market should get themselves ready, so that they will be able to capture the available liquidity before it is taken, in the ever narrowing market window. This requires having a supportable financial track record that complies with regulatory requirements and recent credit rating, culminating in having a prospectus and investor presentation on standby.

Today determines tomorrow

Companies interested in equity funding in the longer term shouldn’t sit idle either. With potential down time because of reduced operating activities, management could make use of the precious time in preparing for a future IPO. Because of the regulatory requirements, which vary depending on your chosen market, it typically takes 6-12 months for a private company to get ready for an IPO – a process which involves looking at how your business has performed over the last 3 years, its outlook and its corporate governance.

Equity ready

Ensuring all the regulatory requirements are met is a given in all IPOs. One key aspect to also consider in an IPO is the equity story - a company’s appeal to potential investors. In the post COVID-19 era, equity story will need to be stronger than ever. Executives need to ensure the company has a solid track record and a future-proof strategy that will resonate with its target investors. Some of the major themes apparent in equity transactions globally in the recent quarters include a strong balance sheet, efficient capital structure and environmental, social and governance (ESG) premium.

GCC IPO activity available from 2015 - present, filtered by stock exchange

Stock Exchange

 

Stock Exchange
Deal value ($m)
Number of IPOs
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How PwC can help you

At PwC, we understand that good preparation is essential to a successful IPO and debt issuance. We have experience in a wide range of international, regional and domestic IPOs and debt issuances, and can provide expert guidance from initial planning, through to execution and beyond.

IPO and debt preparation

Our IPO and debt Readiness Assessment is an early stage diagnostic review of the critical areas needed for a successful issuance. We highlight where current processes, procedures, structures and practices fall short of the requirements for a company whose securities are to be publicly traded and provide recommendations on how to address these gaps. Our assessment can be tailored to include these aspects as well as some broader areas such as business continuity and contingency planning.

IPO and debt execution

We work with issuers and their advisors to provide IPO and debt advisory and assurance services. This may include working capital reporting, financial due diligence, financial positions and prospects procedures assessment, assistance with MD&A drafting in relation to a prospectus, comfort letters and project management.

Authors

Muhammad Hassan

Capital Markets Leader, PwC Middle East

Alex Tsui

Senior Manager, Capital Markets, PwC Middle East

Contact us

Abdelkhaleq Ahmad

Abdelkhaleq Ahmad

Finance, Accounting and Economics Leader, PwC Middle East

Tel: +966 11 211 0400

Muhammad Hassan

Muhammad Hassan

Capital Markets Leader, PwC Middle East

Tel: +971 4 3043443

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