Tech and Capital Markets Reform Fuel GCC IPO Boom

It’s been a dry year for initial public offering (IPO) volume around the world.

But while most stock markets have experienced a decline in both the volume and average value of IPOs so far in 2022, the Gulf Cooperation Council (GCC) region stands out as an exception.

See more: IPO Value Plunges 90% in 2022 in US, Europe

In the Kingdom of Saudi Arabia (KSA), in particular, a strong crude oil market and the government’s market reform agenda have converged to give the country’s stock exchange a significant boost, with the Saudi Stock Exchange or Tadawul raising $5.07 billion from 17 IPOs so far this year.

What’s more, since 2017, KSA has an alternative stock market known as Nomu that businesses can list on, creating an opportunity for IPOs in the country that didn’t exist before.

With a more streamlined listing process and lighter requirements than the main Tadawul exchange, Nomu is intended to support the listing of smaller, fast-growing companies and provide founders and investors with a more accessible way to sell shares in a company on the open market.

In a significant milestone for the exchange, in October, Sure GlobalTech Company was listed on the Nomu exchange, marking what is arguably the first fully fledged FinTech firm to IPO on the platform thanks to Sure’s subsidiary SurePay.

Over the border in the United Arab Emirates (UAE), the GCC’s IPO boom is being fueled by new technologies that make it easier for investors to participate in listings.

The Abu Dhabi Islamic Bank (ADIB) has developed a mobile app feature that allows customers to register their interest in upcoming IPOs, follow listing dates and make IPO payments. As an indicator of the popularity of the feature, the bank announced this week (Nov. 28) that 80% of clients subscribed to IPOs that were issued in 2022 through the ADIB mobile app.

IPO Future Is Bright

With KSA making serious efforts to open up its financial markets, the country is proving an attractive destination for foreign investment, while the UAE is strengthening its position as a regional economic powerhouse.

In a historic first, Americana Restaurants, which operates food and hospitality franchises across the GCC and wider Middle East and North Africa (MENA) region, is also preparing for a joint listing on the Abu Dhabi Stock Exchange and the Tadawul next month.

With investor interest resulting in a 48.2x oversubscription in the UAE and 2.8x oversubscription in KSA, the American listing proves that there is plenty of appetite for more GCC IPOs from both local and international players.

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