GCC Capital Markets Watch - H2 2022

H2 2022 Overview

Strong IPO activity continued in the GCC region in H2 2022 as the regional economies continued to benefit from the resumption of activities post-the health crisis and stronger oil price. Despite H2 2022 having less IPO proceeds than the first half of the year, it was the strongest H2 witnessed in the region in terms of both IPO volume and proceeds since 2019. There were 25 IPOs in H2 2022 (Q4 2022: 18; Q3 2022: 7) raising proceeds amounting to USD9.2 billion (Q4 2022: USD7.2 billion; Q3 2022: 2.0 billion), compared to 23 IPOs in H1 2022 (Q2 2022: 7; Q1 2022: 16) raising proceeds amounting to USD13.7 billion (Q2 2022: 8.7 billion; Q1 2022: USD 5.1 billion).  The increase was  even more apparent when comparing to the 15 IPOs in H2 2021 which raised USD7.1 billion in proceeds. Much of the activity in H2 2022 was skewed towards Q4 2022. KSA led the region in terms of IPO number and proceeds generating USD6.2 billion (approximately 68% of H2 2022 GCC IPO proceeds) from 18 IPOs in H2 2022.

In contrast, the debt market has become quieter in H2 2022 compared to H1 2022. Higher interest rates have encouraged potential issuers to look for alternative sources of financing.

GCC H2 2022 highlights

Regional Activity

The Kingdom of Saudi Arabia generated USD6.2 billion from 18 IPOs across its Tadawul main and parallel markets. The listing of Americana Restaurants International PLC was the biggest IPO in the GCC for the period, generating USD1.8 billion, approximately 29% of all KSA IPO proceeds in H2 2022. Americana’s shares were listed on both KSA’s Tadawul and UAE’s ADX, the first ever dual listing across the two exchanges. The listing of Saudi Aramco Base Oil Company - Luberef was the second largest IPO in KSA generating USD1.3 billion, approximately 21% of KSA proceeds in H2 2022. Other notable listings include the IPOs of The Power and Water Utility Company for Jubail and Yanbu and Riyadh Cables Group Company, which raised USD896.6 million and USD378.4 million, respectively.

Despite having the same numbers of listings, H2 2022 IPOs generated more proceeds for KSA compared to H1 2022 raising USD6.2 billion and USD4.4 billion respectively. Against a backdrop of strong pipeline, both reported and rumoured, KSA’s buoyant IPO market is expected to continue in the near future.

UAE’s DFM played host to 4 IPOs in H2 2022. The listings of Salik Company PJSC, Tecom Company PJSC, Emirates Central Cooling Systems Corporation PJSC (“Empower”) and Taaleem Holdings PJSC generated USD 2.4 billion, approximately 26% of the total GCC proceeds in H2 2022. Three of these listings reflect the Dubai Government’s commitment to realise its vision of listing 10 state owned entities in the near term. Salik’s listing was the largest UAE IPO and third largest for the GCC in H2 2022 generating USD1.0 billion in proceeds. DFM also hosted the first listing of a cooperative in the region with the technical listing of Union Coop.

ADX also experienced an active H2 2022 with the listings of Burjeel Holdings PLC and Bayanat AI PLC generating USD300.1 million and USD171.3 million respectively. Both of these listings took place in Q4 2022.

Overall the UAE had an exceptional performance in 2022 with annual IPO proceeds of USD12.2 billion generated across DFM and ADX, compared to USD2.7 billion in 2021. This level of activity is expected to continue in the near future, supported by both state owned entities and private companies.

Oman also had some activity in H2 2022 with the listing of The Pearl REIF of USD71.6 million. The Pearl REIF is the first leveraged sharia-compliant REIF in Oman. With regards to the future Oman IPO activity, the Oman Investment Authority (OIA) is reportedly looking to exit a number of its investments through IPOs in 2023.

2022 is the best performing year for GCC since 2019 from an IPO perspective in terms of both volume and proceeds. Against a backdrop of strong regional pipelines across both the public and private sectors, and increased investors’ awareness of the region’s potential,the momentum in IPO activity is expected to continue into the near future.

Due to continually increasing interest rates, activity in the GCC debt markets has reduced since the first half of the year.

Notable debt offerings in H2 2022 include the bonds listed by the UAE federal government with a total value of USD2.1 billion on Nasdaq Dubai and a USD1.4 billion sukuk listing by the Government of Qatar on the Qatar Stock Exchange. The Omani government also listed USD385 million of sovereign sukuk on the Muscat Stock Exchange.

In the corporate debt market, Bank Muscat and Ahli Bank listed corporate bonds with a value of USD988 million and USD192 million respectively on the Muscat Securities Exchange to further enhance their Tier 1 capital. IsDB Services and Dar Al Arkan listed a USD1.2 billion and a USD400 million corporate sukuk, respectively, on Nasdaq Dubai.

Share price performance of 2021 and 2022 GCC IPOs* by sector, relative to the respective all share index, from the IPO date to 31 December 2022

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 Mal Capital REIT and Oman reinsurance have been excluded due to insufficient data.}