Surging Oil Revenues Fuel the GCC’s IPO Boom
The GCC IPO market is bucking trends across the U.S. and Europe. Leading the pack is Saudi Arabia, which saw 20 IPOs in 2021 — the highest activity in over 20 years. Investor confidence is high in the region thanks to rising oil revenues and unexpected economic growth. Outpacing IMF predictions, the Saudi economy grew by 9.9% in the first quarter of 2022, representing the highest growth rate in over a decade.
The UAE is also benefiting from the regional economic upswing. During Q1 2022, Abu Dhabi's main index increased by 17.2%, demonstrating a healthy appetite for Emirati stocks. In total, 15 MENA IPOs raised over USD $4 billion in Q1 2022, signaling a strong and promising start to a year marked by global economic uncertainty.
IPO Marketing Trends are Evolving
IPOs are a major source of capital for businesses in the GCC region. To ensure a successful public offering, companies must have a well-crafted marketing strategy. Over the past five years, we have seen several changes and trends in IPO marketing across the GCC.
One of the most notable changes has been the uptick in digital marketing. In the past, companies relied heavily on print and television advertising to reach potential investors. However, with the rise of social media and online platforms, businesses are now turning to digital channels to market their IPOs. This shift is being driven by the need to reach a wider audience more efficiently and at a lower cost.
Another notable trend has been a greater focus on institutional investors. In the past, retail investors were the primary target of IPO marketing campaigns. However, with the rise of professional and institutional investors in the region, companies are now targeting these groups more specifically. This shift is driven by the need to tap into a larger pool of capital.
With the current boom in the IPO market, it is more important than ever for companies to have a well-crafted marketing strategy. Public relations and digital marketing experts can play a crucial role in helping companies prepare for and execute a successful public offering.
Recent IPO Success Stories in the UAE & KSA
In recent years, the UAE and Saudi Arabia have been home to some of the most successful IPOs in the region. In 2021, the International Company for Water and Power Projects (ACWA POWER Co) raised over USD $1.2 billion in its IPO on the Saudi Stock Exchange. This was the largest IPO in Saudi Arabia since Aramco's USD $ 29.4 billion IPO and the largest in the MENA region that year.
Another successful UAE IPO was that of Abu Dhabi Ports, which raised over USD $1.1 billion in February 2022. AD ports group is the largest holding company in the region, contributing 13.6% of Abu Dhabi’s non-oil GDP growth since its establishment in 2006. In its investor filing, the company stated that “The cash proceeds from this primary issuance will be used to fund the company’s organic and inorganic growth plans, allowing the company to accelerate its local and international expansion plans”.
In Dubai, utility company DEWA became the world's second-biggest public offering in 2022 and the most significant for the region since Aramco's 2019 listing. DEWA's IPO was oversubscribed more than 37 times and ended up raising over USD $6.1 billion. The company plans to use the proceeds to fund its ambitious plans to provide clean energy for all of Dubai by 2050.
Projected IPO Trends across the GCC Region
As oil prices continue to surge, we expect to see more successful IPOs in the GCC region. Saudi Arabia and the UAE are likely to continue leading the way, buoyed by a strong appetite from both local and international investors. Qatar, Kuwait, and Bahrain are also expected to see increased activity in the IPO market.
However, it is important to note that not all companies are ready or suitable for an IPO. To ensure a successful public offering, businesses must be financially and operationally ready. This means having a solid business plan, efficient internal processes, and a track record of profitability.
Many companies choose to seek the help of advisory firms and marketing experts to prepare for and execute a successful IPO. These firms can provide invaluable support and guidance throughout the process, from strategic planning to marketing and investor relations. With the right team in place, companies can increase their chances of success in the increasingly competitive IPO market.