2023 has all the makings of another bumper year for Gulf IPOs

Post the success of ADNOC Gas’ IPO, 2023 will see more listings across DFM and ADX markets. The active line-up is primarily due to the government’s initiative to encourage such going to public moves and thus broaden the capital markets.

As per the latest forecasts, more than 10 companies are expected to list this year. ADNOC Gas raised $2.5 billion from the IPO, such was the enthusiasm orders received were $124 billion, 50x times the offer.

The upcoming listing would be from diverse sectors, including tech, financial asset management and healthcare. The ongoing momentum is a continuation from last year when the entire Gulf markets raised $23 billion in primary equity sell-offs.

While higher energy prices have been the number one factor, the UAE and Saudi Arabia also announced significant initiatives that have shown their willingness to diversify beyond an oil and core sector economies.

A remittance bonanza

The latest IPO is by the UAE-based exchange house Al Ansari Exchange. The IPO offers 750 million shares representing 10 per cent of the capital. The company is already cash rich and is targeting a minimum dividend of Dh600 million this year. The dividend amount would represent nearly 70 per cent of net profit. For 2022, Al Ansari had a net profit of Dh595 million. The exchange enjoyed one significant tailwind - the UAE Exchange Center’s closure a couple of years ago.

Segment-wise, remittances provided Dh737 million of revenues on an operating income of Dh1.15 billion. The remittance volumes from UAE and Gulf are expected to grow exponentially. The UAE remittance transaction value is expected to record an annual CAGR of 4.78 per cent between 2023–27.

On average, expats will show an active interest in remittances this year owing to weaker Asian domestic currency rates for INR, PKR and others. The boom prospects in the IPO market are here to stay for a considerable amount of time.