KSA Leads GCC IPO Market: Markaz

The Kingdom of Saudi Arabia (KSA) led the GCC’s initial public offering market in the first half of 2024, raising US$2.1 billion in what was an annual increase of 141%, an analysis has revealed.

In its latest report, Kuwait Financial Center, also known as Markaz, noted that the Kingdom saw 19 offerings in the six months to the end of June, accounting for 59% of the total IPO proceeds in the GCC region. These included US$1.95 billion listed in its main market and US$143 million in the parallel market, also known as Nomu.

Saudi Arabia’s ambitious privatization and diversification efforts across sectors such as healthcare, technology, and renewable energy have significantly broadened the market’s appeal. These initiatives offer investors exposure to high-growth industries, positioning the Kingdom as an attractive destination for investment in sectors poised for substantial development and innovation.

Led by its pivotal Capital Market Authority advancing Vision 2030 goals, the Saudi capital market is on a journey of expansion, and saw net foreign investment reach SR198 billion (US$52.79 billion) in 2023 – a 7.7% annual increase, according to CMA’s June report.

Top IPOs

Among the top five GCC IPOs by proceeds in the first half of this year, the Markaz report noted that Dr. Soliman Abdulkader Fakeeh Hospital Co., listed on Saudi Arabia’s main market, raised US$764 million, making it the largest IPO during that period. The healthcare firm offered 49.8 million shares, representing a 21% stake, and received an oversubscription of 119 times. The IPO proceeds accounted for 21% of the total GCC IPO proceeds during the period.

Alef Education, listed on the Abu Dhabi Securities Exchange, secured the second spot with its IPO raising US$515 million in proceeds. The company offered 1.4 billion shares, representing a 20% stake, which was oversubscribed 39 times. According to Markaz, Alef Education’s proceeds constituted 14% of the total GCC IPO proceeds during the period. Parkin Co., listed on the Dubai Financial Market, raised US$429 million, making it the third-largest listing in the GCC region in the first half of this year.

The parking facility provider offered 750 million shares, equivalent to a 25% stake. The IPO proceeds constituted 12% of the total GCC IPO proceeds during the period and were oversubscribed 165 times. Meanwhile, Spinneys Co., also listed on DFM, raised US$375 million in proceeds. The supermarket chain offered 900 million shares, representing a 25% stake, and was oversubscribed 64 times.

Markaz revealed that Spinneys Co.’s proceeds constituted 11% of the total GCC IPO. Similarly, Modern Mills Co., listed on Saudi Arabia’s main market, raised US$314 million through the sale of 24.5 million shares, or a 30% stake, and was oversubscribed 127 times. Modern Mills Company's IPO constituted 9% of the total GCC IPO proceeds.

GCC IPO market

The overall GCC region experienced a decline in IPO activity in terms of value, with total proceeds amounting to US$3.1 billion from 23 offerings in the first half. This represents a 32% decline compared to the same period of the previous year.

In the UAE, IPO proceeds totaled US$1.3 billion in the first six months of this year, marking a year-on-year decrease of 67%. Of this amount, DFM hosted US$805 million, constituting 23% of the total GCC IPO funds in the first half.

Similarly, ADX recorded US$515 million in IPO capital, accounting for 14% of the total GCC IPO funds during the period. Meanwhile, Kuwait saw IPO funds totaling US$147 million during the same period, accounting for 4% of the total GCC IPO value and listed on Boursa Kuwait.

The report revealed that the healthcare sector accounted for nearly 22% of the total funds raised during the first half of this year through three offerings, totaling US$788 million. In contrast, the technology sector raised over US$515 million during the same period, constituting 14% of the total GCC IPO proceeds.

Similarly, new listings from the industrial sector constituted 12% of the region’s total funds, followed by the consumer staples industry and the food and beverages sector at 11% and 9%, respectively. Additionally, the commercial and professional services industry contributed 8% to the region’s total IPO funds, closely followed by the insurance sector at 6%.

Middle East IPOs

Overall, IPOs in the Middle East are set for continued positive aftermarket performance this year, following significant gains in the first quarter, as reported by PwC in May. It also highlighted that the Saudi Stock Exchange has emerged as a dominant force in the GCC equity market.

In the same month, Mohammed Al-Rumaih, CEO of the Saudi Exchange, noted that the introduction of ‘Market Making’ and the debut of ‘Single Stock Options’ have enhanced Tadawul's appeal among international investors.

Earlier this month, another report released by CMA noted that 42 companies listed in Saudi Arabia’s benchmark index and parallel market benefitted from the nominal value split mechanism in 2023. This followed the CMA’s execution of the Companies Law and its Executive Regulations on Jan. 19, 2023, permitting listed firms to split stock par values from SR10 (US$2.67) to various lower options. Under this mechanism, a company divides its existing shares into multiples to enhance trading volume and accessibility for investors, without altering its total market capitalization.