Investors began to pay more active attention to initial public offerings (IPOs) of shares in the Persian Gulf countries, where recently companies from various areas of activity, including healthcare, beauty industry, and retail, were preparing to list their stocks against the background that the economy of this region is undergoing a process of diversification, gradually reducing its dependence on oil as the main growth platform.
On Monday, November 4, Lulu Retail Holdings Plc said its Abu Dhabi IPO was set to price at the top of a planned range. This company has increased the number of stocks in the offer. The corresponding decision was made against the background of high demand. Currently, the company intends to raise $1.72 billion on the biggest listing in the United Arab Emirates this year.
United International Holding Co., which is based in Saudi Arabia and specializes in providing financial services, according to media reports, also looks to be pricing its IPO at the highest marketed level. Currently, this firm’s $264 million deal is heavily oversubscribed.
In recent years, the structure of stock sales in the Middle East has been dominated by state assets. At the same time, gradually this situation began to show signs of change. Currently, new listings indicate a more extensive diversification. Saudi Arabia and the United Arab Emirates are making significant financial injections into their economic systems to build new businesses. The relevant actions indicate that the region, which has large oil reserves, is interested in forming a new model of economic growth that will not rely entirely or on a dominant scale on minerals.
The high demand for IPOs in the Gulf countries is largely due to performance. In the relevant context, it is worth noting that some stocks showed rapid growth in the early days of trading. Some of these shares, such as Oman’s OQ Exploration & Production, declined in early trading. At the same time, this circumstance has not become a factor in weakening the high level of demand from investors. A string of other listings is expected in the current year.
According to media reports, on average, shares of companies that went public through IPOs in the Persian Gulf countries in the current year rose by 7% on the first day of trading.
Joice Mathew, head of equity research at United Securities in Muscat, stated that there is currently observed a continued appetite in the primary market, and deals are gaining good demand.
Several other private companies from different areas of activity are currently also lining up offers. Delivery Hero is teeing up the listing of its Middle East food delivery unit Talabat in Dubai and Alpha Data in Abu Dhabi. In Saudi Arabia, the capital markets authority has approved the IPO of cosmetics retailer Nice One and hospital operator Almoosa.
Abu Dhabi’s wealth fund is currently preparing to sell shares of air carrier Etihad. At the same time, Saudi Arabia’s Public Investment Fund plans to list medical procurement company Nupco.
Special attention should be paid to Oman’s state energy company OQ SAOC’s decision to list its methanol and liquified petroleum gas subsidiary. This practice is not a typical example of privatization for the region since the focus is on liquefied natural gas, not crude oil.
Joice Mathew stated that OQ Base Industries looks more like a utility play rather than the typical petrochemical peers.
Likely, the current tendency related to the listing of companies from the Persian Gulf countries will continue in the foreseeable future.
As we have reported earlier, Saudi Fintech Company Rasan to Sell 30% Stake in Riyadh IPO.
