Dubai adds to Mideast IPO Boom with Gov't Asset

Dubai announced plans to rouse its dormant stock exchange by listing some of its state-owned entities’ shares on the bourse and this will add to the region’s flurry of initial public offering (IPO) activity says HSBC.

Jon Connor, Regional Head of Advisory & Investment Banking Coverage at HSBC, and Samer Deghaili, Regional Head of Capital Markets at HSBC, told Zawya the region is experiencing a large IPO boom.

“Quite visibly, the region is experiencing a large IPO boom, largely driven by governments bringing some of their crown jewels and prized assets to the public market,” Deghaili said.

After Abu Dhabi’s state-owned giants hived off units following Riyadh’s IPOs list led by ACWA Power International, which raised $1.2 billion from investors, and the Tadawul group, which raised $1 billion. For 2022, the Tadawul stock exchange has already received 50 applications for IPOs.

Late last year, Dubai’s government announced plans to list 10 state-backed companies and set up a 2-billion-dirham ($545 million) market maker fund to boost trading activity.

Emirates airline, the Dubai Electricity and Water Authority, and Salik (a road toll system) are a few of the entities expected to list some of their shares.

LOOKING FORWARD

HSBC anticipates that equity capital market activity will be the most active in 2022, possibly exceeding that of 2021.

“Relatively, equity capital markets will continue to drive a lot of the opportunities in 2022, probably increasing from what we’ve seen in 2021,” said Connor.

Debt capital market activity in the MENA region reached a new high of $140 billion in 2020, driven by jumbo sovereign issuances. With $122 billion in issuances, 2021 had the region’s second highest volume ever.

HSBC, which led the league tables in MENA bond and sukuk issuances last year with 91 deals totaling $17.25 billion, expects the trend to continue.