Saudi Arabia expected to lead regional IPO market in 2021

Saudi Arabia expected to lead regional IPO market in 2021
Saudi Arabia expected to lead regional IPO market in 2021

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Jeddah - Yasmine El Tohamy - RIYADH: Saudi Arabia is set to lead the regional initial public offering (IPO) market in 2021, with authorities believed to be viewing over 15 potential listing applications, according to a report issued by the Kuwait-based KAMCO Investment Co.

The report said the Kingdom “continued to provide leadership for primary markets in 2020” as four out of the seven IPOs in the region were on the Saudi Stock Exchange (Tadawul).

The Kingdom also dominated in terms of IPO proceeds generated, accounting for 78 percent — or $1.45 billion — of issuance.

Qatar witnessed a primary issuance, with the IPO of QLM Life & Medical Insurance Co. amounting to $178 million in December 2020.

The UAE re-entered regional IPO markets with the issuance of Al-Mal Capital REIT worth $95.3 million.

The report said Saudi Arabia’s healthcare operator Dr. Sulaiman Al-Habib Medical Services had the largest IPO in the region in 2020, with proceeds of $698.6 million.

Saudi retailer Bin Dawood Holding came next with proceeds of $585.1 million.

Globally, IPO volumes grew 15 percent year-on-year in 2020 to reach 1,322 issuances. Proceeds rose 26 percent to $263 billion over the same time period, the highest level since 2010 and driven mainly by a 69 percent year-on-year surge in issuances in the US. Elsewhere around the globe, China saw a 41 percent increase in the number of issuances.

During 2020, the total number of IPOs in Gulf Cooperation Council (GCC) member states declined to seven issuances compared to 12 in 2019, but KAMCO said it is optimistic for 2021.

“We expect IPO markets in the GCC to remain active in 2021, given the number of catalysts that could support primary markets from within the region,” it added.

The report said proceeds from GCC issuers in 2020, on regional and international exchanges, amounted to $1.87 billion, compared to $29.04 billion in 2019.

“The IPO market in the GCC could have witnessed higher activity in 2020 in our view, particularly in H1-2020, as issuers chose to defer their primary market entrances, until secondary markets recover from the impact of Covid-19,” it added.

“This led to the backend loaded issuances in 2020, while other issuers pushed their ambitions into 2021.”

In December, Tadawul said it plans to start laying the groundwork for its own IPO, with the launch expected in the coming year.

Speaking at a webinar organized by Bloomberg, Khalid Abdullah Al-Hussan, CEO and board member of Tadawul, said 2020 had been “an exceptional year” but “the market reacted proactively” to the impact of the pandemic.

As an example of the bourse’s resilience, he pointed to the fact that Tadawul, which was established in 2007 and is 100 percent owned by the Public Investment Fund, in August launched the Kingdom’s first exchange-traded derivatives market and clearing house, part of its strategy to make its equity markets more attractive to foreign investors.

As well as his company’s own listing, he expressed hope that 2021 will be an important year for IPOs in the Kingdom.

Speaking at the same event, Ammar Al-Khudairy, chairman of Samba Financial Group, echoed Al-Hussan’s optimism, saying: “A nice number (a dozen or so) of IPOs are coming up in 2021.”

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