Saudi Arabia to dominate regional IPO market in 2021: KAMCO

By Rahul Vaimal, Associate Editor
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In 2021, Saudi Arabia will be the most prominent regional initial public offering (IPO) market with authorities said to be viewed more than 15 potential listing applications, as per a recent report by the Kuwait-based asset management company KAMCO.

Last year, the Kingdom continued its leadership for primary markets as four out of the seven IPOs in the region were on the Saudi Stock Exchange (Tadawul). The Kingdom also secured its prime position in terms of IPO proceeds generated, accounting for 78 percent or $1.45 billion of issuance.

According to the report, Qatar witnessed a primary issuance, with the IPO of QLM Life & Medical Insurance amounting to $178 million in December 2020, while the UAE re-entered regional IPO markets with the issuance of Al-Mal Capital REIT valued at $95.3 million.

KAMCO’s report further revealed Saudi Arabia’s dominance in the region in terms of the largest IPO in 2020 by healthcare operator Dr. Sulaiman Al-Habib Medical Services with proceeds of $698.6 million. The second position is also secured by the Kingdom with retailer Bin Dawood Holding’s IPO proceeds of $585.1 million.

The IPO volume across the globe has increased by 15 percent year-on-year in 2020 to reach 1,322 issuances. Proceeds rose 26 percent to $263 billion over the same time period which marks the highest level since 2010 and it is driven mainly by a 69 percent year-on-year surge in issuances in the US.

During 2020, the total number of IPOs in GCC member states fell 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,” the report added.

The report notes that the IPO proceeds from GCC issuers in 2020, on regional and international exchanges accounted for $1.87 billion, compared to $29.04 billion in 2019.

“The IPO market in the region 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. This led to the backend loaded issuances last year, while other issuers pushed their ambitions into 2021,” the KAMCO report added.

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, 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. Further, he expressed the hope that 2021 will be an important year for IPOs in the Kingdom.