Shares of data analytics company Presight AI soared on Monday, the first day of trading on the Abu Dhabi Stock Exchange, after a $496 million initial public offering that was oversubscribed 136 times.
Demand is not transient. He is two weeks after Adnoc Gas raised $2.5 billion on the emirate’s largest list. They are the latest in a pipeline of rapidly flowing products in the Middle East, as opposed to Europe’s moribund market.
The 51 IPO According to EY, last year was a record year across the Middle East and North Africa. They raised his $22 billion, up 179% from 2021, the advisory firm said, adding that the market looked “healthy” this year.
Miguel Azevedo, chairman of Citigroup’s Middle East and Africa investment banking division, said the region had “appeared on the radar screen.”
“After Covid, with so many people moving here and so many IPOs, the world has been forced to pay attention to this region. I was collecting,” he said.
Bankers say financial regulatory reforms, a push for privatization amid political stability, and oil and gas prices rising sharply from Covid-19 pandemic lows have fueled the IPO frenzy and private deal growth. He says he supports both.
“The constant turmoil has calmed down and oil prices are above breakeven. [for governments]said Sammy Keiro, senior adviser to Morgan Stanley.
Saudi Arabia is revamping its oil-dependent economy under ambitious Crown Prince Mohammed bin Salman. The United Arab Emirates has attracted financial firms to Dubai’s commercial center and launched a dizzying number of listings in the oil-rich capital of Abu Dhabi. And small Qatar, which successfully hosted the soccer World Cup, has doubled its gas exports.
Private capital fund managers put $19.8 billion into 191 deals in the Middle East last year, according to the Global Private Capital Association, the only place in the world where investment value increased year-on-year in 2022 is. $600 million was invested in 2018.
The combination of regulatory reform and soaring oil prices has been felt most strongly in the Saudi stock market, with a standout deal being the $29 billion listing of oil supermajor Saudi Aramco in 2019.
This has led to a surge in IPOs, making 2022 a record year. Over the past five years, the market capitalization has surged by about 475%. There are now 269 listed companies, up from 188 at the end of 2017, with another 80 in the process of listing, according to market regulators.
In Abu Dhabi, a national oil company has listed a string of assets, fueling a surge in similar listings.
Fast food operator Americana, which is owned by the Saudi sovereign public investment fund and Dubai businessman Mohamed Arabah, went public on both the Abu Dhabi and Riyadh exchanges in December amid soaring demand.
“It’s the same strategy as in Europe. In the UK, privatization picked up in the mid-to-late 80s,” said a senior US-based capital markets banker. “It helped stimulate the market, promote more equity culture, and encourage private companies to go public.”
Dubai’s successful response to the pandemic has attracted crypto billionaires and financial executives who have taken advantage of its open economy. Many companies took root and persuaded them to follow suit.
Hedge funds and asset management firms, including Brevan Howard and Exodus Point, have been established in the city’s financial district. Negotiations are currently underway to license an additional 50 hedge funds as managers look to tax-free sunshine and favorable trading windows across Asia and the United States.
“International investors are coming — big, respectable adult and respected long-only asset managers from the United States and Europe are working with their own people to prepare to invest more in that world. investing together [the Gulf]said another US investment banker.
Dubai embarked on its own privatization campaign last year, pledging to list 10 state-affiliated entities after seeing capital markets in neighboring countries heat up. Four companies are already listed, including utility company Dewa and road-toll company Salik.
Azevedo said the region was moving into a “second phase” of listings, with “non-governmental organizations conducting IPOs in the UAE in both Dubai and Abu Dhabi.” “There will be several family-owned businesses coming up this year,” he added.
In countries such as Saudi Arabia and the UAE, family-owned businesses make up 90% of the private sector. When a founder dies, his heirs often fall into blame. An IPO is a means of imposing corporate his governance and succession planning arrangements to avoid family strife.
Al Ansari Financial Services, a family-owned company and the UAE’s largest exchange chain, raised $210 million on Monday amid strong demand for an IPO on Dubai’s stock market. Other family-owned groups in the region are mature enough to go public, including Dubai-based shopping mall conglomerate Majid Al Futtaim, Lebanese retailer Azadea and Abu Dhabi hypermarket chain Lulu.
Azevedo predicted that these would be followed by a third wave of “young fintech and technology-enabled companies raising money in the private capital markets.”
Potential contenders include agritech firm Pure Harvest, cloud kitchen platform Kitopi and classifieds company Dubizl, bankers say.
The recent bank failures in the US and Europe have revived fears of a recurrence of the global financial crisis that has been booming in the Middle East as the rest of the world plunges into financial collapse.
At the time, the Gulf nations boasted of being “cut off” from the global economy before the 2009 debt crisis and oil price crisis.
Tarek Fadlallah, Middle East Chief Executive Officer, Nomura Asset Management, said: “Oil prices plummeted during the global financial crisis, but the big difference this time is that prices remain within their comfort zones.”
