Abu Dhabi Securities Exchange tops region for market value increase

RIYADH: Gulf markets have witnessed a banner year with regards to initial public offerings, benefiting from a war-driven surge in oil prices.

The Gulf Cooperation Council exchanges have seen an increase in foreign inflows despite ongoing global volatility, which sent shares to their lowest levels in years because of inflation and interest rate concerns.

Saudi Arabia’s stock market raised almost $9.3 billion through 15 IPOs last year, making it one of the most active markets in the Middle East and Africa.

Tadawul, or the Saudi Stock Exchange, maintained its momentum in 2022, as it listed 17 companies, raising $5.07 billion from IPOs in the first half of the year.

The main TASI index accounted for eight listings generating $4.4 billion, and the parallel Nomu market had nine listings worth $649 million. 

Among the major initial share sales were Elm Co., Nahdi Medical Co. and Al-Dawaa Medical Services Co., which sold out in record time.

Elm, Saudi Public Investment Fund’s digital security firm, ranked second among all high-flying stocks in the first half of 2022, gaining 70 percent since its listing this year.

Al-Dawaa Medical Services Co., whose IPO was 2,515 percent oversubscribed, suffered a 9 percent drop in share price since listing. 

Its pharmaceutical rival Nahdi, however, recorded a 9 percent jump in its stock price since its market debut, after the retail tranche of its IPO was oversubscribed 13 times.

The surge in IPOs further helped boost the value of foreign ownership in the Kingdom, which reached SR450 billion ($119.72 billion) by the end of the first quarter of 2022 — an increase of 209 percent compared to the same period last year.

The Saudi-listed companies with the highest foreign investor ownership are Alinma Tokio Marine Co., Arabia Insurance Cooperative Co., and United International Transportation Co., with 29, 28, and 27 percent foreign ownership, respectively. 

The Saudi stock market also witnessed a growth of 85 percent in GCC ownership to SR60.6 billion by the end of the first quarter of 2022 from SR32.7 billion two years ago.

Even as the Saudi market led the region in initial share sales in the first quarter of 2022, GCC peers also witnessed a flurry of IPOs since the start of the year. 

The outlook for the region is positive, and the IPO rally is only set to boom for the rest of the year, with many companies lined up for share sales in the oil-rich region.

Here’s an overview of some of the biggest GCC IPOs in 2022:

Dubai Electricity and Water Authority

Dubai Electricity and Water Authority was one of the largest IPOs of the year globally. The state-owned utility raised $6.1 billion and attracted orders valued at $86 billion from investors. This offering marked the biggest regional IPO since Saudi oil giant Aramco raised over $25 billion in 2019.

Nahdi Medical Co.

Pharma chain operator Nahdi Medical Co. completed a $1.36 billion IPO on Saudi Arabia’s primary stock market in March. Present across the Kingdom and the UAE, the company held a 31 percent market share of total pharmacy sales in the Kingdom by the end of 2021.

Borouge

Petrochemicals maker Borouge’s $2 billion IPO drew $83 billion in orders from Abu Dhabi’s largest-ever share sale. Borouge, which is a joint venture between Abu Dhabi National Oil Co. and Austrian chemicals producer Borealis, sold almost 3 billion shares, representing 10 percent of capital. The IPO attracted interest from prominent investors, including the world’s largest asset manager BlackRock Inc. and Fidelity.

TECOM Group

Dubai business park operator TECOM Group raised $454 million by selling 625 million shares in an IPO, with an offer price of $0.73 per share. The global offer attracted substantial demand from both institutional and retail investors, with a total gross demand of $9.6 billion and an oversubscription level of 21 times.

Abu Dhabi Ports

Abu Dhabi Ports, one of the leading logistics facilitators in the region, sold 1.25 million shares in an IPO worth $1.1 billion. Even as the shipping sector got hit by supply chain snags, the IPO of the port operator was a success as it attracted investor interest and made a strong debut on the Abu Dhabi Securities Exchange.

Elm Co. 

Owned by the PIF, Riyadh-based digital security firm Elm Co. raised $820 million in proceeds from an IPO. The final offer price was $34.1 per share, the top end of an indicative range.