Last year, issuances picked up in H2, says Kamco Invest
Kuwait-based Kamco Invest expects the GCC initial public offering (IPO) market to remain active in 2021, given the number of catalysts that could support primary markets within the region.
In a report issued Sunday, Kamco Invest said that Saudi Arabia will continue to lead the regional IPO market in 2021 as well, with the Capital Markets Authority (CMA) reportedly mentioning in November that they are reviewing more than 15 applications for listing both in the main market and the Nomu parallel market.
For the UAE, the most important catalysts in 2021 are the launch of the Nasdaq Dubai Growth Market for SME companies, and the impact of the Dubai Expo later in the year.
In terms of sectors, issuances of newer consumer-linked businesses, and asset light models that focus on digitization, technology disruption, and healthcare that gained market share in 2020 from the impact of COVID-19, could continue to warrant higher valuations.
Nevertheless, higher activity in 2021 would still depend on secondary market performance and volatility, the unwinding of the impact of the pandemic, including the effectiveness of the vaccine, and geopolitical situations worldwide.
For 2020, the market remained active despite the COVID-19 led market sell-off early in the year, as issuances picked up in the second half, Kamco Invest said.
The number of IPOs from the GCC, both on regional and international exchanges, declined to seven issuances in 2020, from 12 in 2019, including the landmark Aramco IPO. Proceeds for 2020 from GCC issuers both on regional and international exchanges reached $1.87 billion from $29.04 billion the previous year.
In Kamco’s view, there could have been higher activity in 2020, particularly in the second half, as issuers chose to defer their primary market entrances, until secondary markets recovered from the impact of COVID-19. This led to the back-end loaded issuances in 2020, while other pushed their plans into 2021.
In terms regional listings, Saudi Arabia continued to lead the primary markets as four out of the seven GCC IPOs debuted on the Tadawul. The kingdom also dominated in terms of IPO proceeds, raking in 78 percent of the of issuances at $1.45 billion.
In Qatar, QLM Life & Medical Insurance Co., had an issuance with the company raised $178 million in December.
UAE re-entered the regional IPO markets with the issuance of Al Mal Capital REIT worth $95.3 million.
Saudi healthcare operator Dr. Sulaiman Al Habib Medical Services had the largest IPO in the region in 2020, with proceeds of $698.6 million, followed by retailer, Bin Dawood Holding—also from Saudi—with proceeds of $585.1 million.
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