IR Monitor Middle East – December 2022
The year 2022 concludes with positive sentiment around what comes next for Middle East capital markets in 2023, as analysts forecast the GCC IPO trend to continue well into the new year. The month of December echoed this movement, having purported several transactions on the horizon, including that of the Public Investment Fund in Saudi Tabreed, as well as the successful close of TAQA, Mubadala and ADNOC’s acquisition of a stake in clean energy powerhouse Masdar. As a result of this flurry of activity, Barclays is exploring its re-entry to the Kingdom of Saudi Arabia following an almost decade-long hiatus. Lastly, although this year has been unprecedented for the region’s capital markets, and specifically for Dubai, reports show that many of the Emirate’s newly listed shares are trading below IPO prices amid stringent macroeconomic conditions.
GCC IPO bonanza set to continue next year amid booming economies
The initial public offering bonanza that bucked the global trend and allowed GCC companies to raise tens of billions of dollars by listing their shares will continue next year amid booming economies, analysts say. The National reported that market fundamentals are strong and liquidity remains abundant, especially in the six-member economic bloc of GCC. The drive to bring the government sector entities to the market, primarily in the UAE, the Arab world’s second-largest economy, will further accelerate the IPO momentum going into the next year.
Most of Dubai’s newly listed shares are trading below IPO price
A flurry of initial public offerings in Dubai this year promised to revive the city’s trading volumes and help deepen capital markets. Now, the majority of those newly listed shares are trading below their IPO price as oil declines weigh on appetite, according to Bloomberg. The latest to list is private school operator Taaleem Holdings, which dropped as much as 13% on its trading debut after raising $204 million from an initial public offering. Despite this, Morgan Stanley’s analysts have kept the UAE as their top regional pick, noting that “the UAE’s valuations remain most attractive within the Middle East.”
Barclays weighs Saudi re-entry amid capital markets boom
Barclays is exploring a return to Saudi Arabia in a bid to capture a slice of the country’s burgeoning capital markets, as reported by Reuters. The British bank is looking at securing a license in the kingdom to be able to manage deals including initial public offerings. Barclays would enter an increasingly competitive market led by Western banks, such as Moelis & Co, Goldman Sachs, JPMorgan and HSBC, whom are all vying for IPOs and advisory work on the kingdom’s multibillion projects.
Americana shares surge on market debut after raising $1.8bn in IPO
Shares of Americana, the largest quick-service restaurant operator in the Mena region, surged above their listing price as the company made its debut on the Arab world’s two biggest stock markets on December 12. The company’s shares, which started trading under the ticker symbol “AMR” on the Abu Dhabi Securities Exchange, jumped about 12.6 per cent to Dh2.95 ($0.80) in early trading. The company’s shares, trading under the symbol “AMERICANA” on the Saudi Tadawul market, climbed as much as 6.7 per cent to 2.86 riyals ($0.76).
TAQA, ADNOC, and Mubadala complete landmark transaction for stake in Masdar clean energy powerhouse
The transaction between three Abu Dhabi champions was first announced in December last year by His Highness Sheikh Mohamed bin Zayed Al Nahyan, President of the United Arab Emirates. The partnership sets out to rapidly propel Masdar into a global clean energy powerhouse that consolidates the renewable energy and green hydrogen efforts of TAQA, Mubadala, and ADNOC. TAQA is taking the leading role in Masdar’s renewable business with a 43% shareholding, while Mubadala retains 33% and ADNOC holds 24%. ADNOC is taking the leading role in Masdar’s green hydrogen business with a 43% stake, Mubadala holding 33%, and TAQA 24%.
Saudi’s PIF eyes $250m stake in cooling firm ahead of IPO
Saudi Arabia’s Public Investment Fund (PIF) is in talks to buy a stake worth about $250m in Saudi Tabreed, the local venture of UAE-listed National Central Cooling, according to people familiar with the matter. The deal would give PIF a significant holding in the district cooling company ahead of a planned IPO offering in the next two-to-three years. Terms of the agreement aren’t finalised and may change.
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