The maiden offerings’ pipeline in the Gulf Co-operation Council (GCC) remains strong for corporate and sovereign assets, according to Kamco Invest, a leading regional economic think-tank.
"The IPO pipelines remain strong from both corporates and potential listings of state-owned assets," Kamco said a latest report.
The report however noted that a number of potential risks do appear in 2022, that could impact the IPO activity within the region, after a stellar 2021.
Saudi Arabia's bourse reportedly has 50 applications for IPOs in 2022, while Dubai announced the listing of 10 government and state-owned companies for the year. Regulators are also considering different vehicles such as SPACs (special purpose acquisition companies) and market maker funds to improve liquidity and participation within their respective stock markets.
"We therefore believe that a strong pipeline, steady market valuations and regulator support are enough catalysts to keep the GCC IPO market activity strong in 2022, and expect Saudi and the UAE stock exchanges to continue to lead the region in terms of issuances," it said.
The potential risks for regional IPO markets include new waves and variants of Covid-19, interest rate hikes, global supply chain disruptions, geopolitics, stock market volatility and oil price volatility, according to the report.
"Nevertheless, we expect secondary market valuations and stock market performance to be the more important considerations for corporates and potential IPO forays in 2022, as the GCC corporates would like to capitalise on valuations and liquidity that currently prevail in the market," it said.
After remaining active in 2020, GCC IPO issuances had a standout year in 2021, supported by secondary market valuations, and global cues in terms of performance and liquidity, Kamco Invest said.
Total number of IPOs from the GCC rose to 20 issuances in 2021, from seven issuances in 2020, it noted.
The proceeds from the GCC issuers jumped almost 4.6 times to $7.52bn from $1.64bn in 2020, based on Bloomberg and PwC estimates.
The IPO activity within the region picked up in-line with global IPO activity, while secondary market performance and valuations supported issuers’ pursuits to come to primary capital markets, as the MSCI GCC was up 34.9% in 2021.
On the other hand, the Covid-19 vaccine rollout optimism, rebound in global economic activity, stimulus-led liquidity, and strong stock market performance pushed global IPO markets in 2021 to witness its best year in 20 years, with 2,388 deals raising $453.3bn, as per Ernst & Young.