A number of potential risks do appear in 2022, that could impact IPO activity within the region, after a stellar 2021 performance which saw 20 IPOs in the GCC, shooting up from 7 issuance in 2020.
However, a strong pipeline, steady market valuations and regulator support are enough catalysts to keep GCC IPO market activity strong in 2022, as per an analysis by Kamco Invest, a premier investment company based in Kuwait. Kamco expects Saudi and UAE (DFM & ADX) stock exchanges to continue to lead the region in terms of issuances.
IPO pipelines remain strong from both corporates and potential listings of state-owned assets.
Saudi Arabia's stock exchange reportedly has 50 applications for IPOs in 2022, while Dubai announced the listing of 10 government and state-owned companies for the year. Regulators are also considering different vehicles such as SPACs and market maker funds to improve liquidity and participation within their respective stock markets.
Meanwhile, after remaining active in 2020, GCC IPO issuances had a standout year in 2021, supported by secondary market valuations, and global cues in terms of performance and liquidity.
Proceeds for 2021 from GCC issuers jumped almost 4.6x to $7.52 billion from $1.64 billion in 2020, based on Bloomberg and PWC estimates. IPO activity within the region picked up in-line with global IPO activity, while secondary market performance and valuations supported issuers’ pursuits to come to primary capital markets, as the MSCI GCC was up 34.9% in 2021.
Saudi Exchange followed by ADX led ECM activity; SPACs see GCC sponsors Saudi Arabia maintained its leadership position for IPO issuances from the region in 2021, as 15 out of the 20 GCC IPOs debuted on either the Tadawul or the Nomu. Saudi Arabia dominated in terms of IPO proceeds, raking in almost 62% of the issuances at around $4.65 billion in 2021.
Saudi Arabia also registered the largest IPO in the region in 2021 with Acwa Power ($1.21 billion). ADX was the other active market with 3 deals and proceeds of $2.63 billion, and witnessed the second largest regional issuance of 2021 with the IPO of Adnoc Drilling ($1.10 billion).
Separately, similar to global trends, SPAC IPOs were also sponsored from the GCC, with the IPO of Blue Whale Acquisition Corp ($229 million) from Mubadala Capital listed on Nasdaq, as per Bloomberg. Blue Whale will focus on high-quality growth companies in the media, entertainment, and technology, and is included in the IPO deals list for 2021.
The Covid-19 vaccine rollout optimism, rebound in global economic activity, stimulus-led liquidity, and strong stock market performance pushed global IPO markets in 2021 to witness its best year in 20 years, with 2,388 deals raising $453.3 billion, as per EY. Deal numbers were reportedly up by 64% y-o-y, while issuance proceeds jumped by 67% y-o-y.
Technology (611 deals, proceeds of $147.5 billion), Healthcare (376 deals, proceeds of $65.4 billion) and Industrials (310 deals, proceeds of $63.1 billion) led 2021 global IPO sectoral activity, with both Technology and Healthcare witnessing record-breaking deal numbers and proceeds in 2021, bettering record numbers set in 2020, as per EY. SPAC IPO activity continued to remain popular, as deal numbers and proceeds increased by 136% and 97% y-o-y, respectively, as per EY.
The number of unicorn IPOs also reportedly doubled in 2021 with 79 unicorn IPOs raising total proceeds of $83 billion (2020: 31 unicorn IPOs for $31.6 billion).-- TradeArabia News Service