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GCC stock markets expected to witness flurry of IPOs - Arab News

RIYADH: The Gulf stock markets are expected to have another busy year of initial public offerings in 2022 with Saudi Arabia’s bourse said to be currently reviewing 50 IPO requests.

“We expect Tadawul and ADX to be very busy. The major difference in 2022 is that the Dubai financial market will be busy too,” Reuters quoted Christian Cabanne, Bank of America’s head of equity capital markets for Central and Eastern Europe, Middle East and Africa, as saying.

Saudi Arabia’s stock exchange is also considering whether to allow blank-check companies, known as SPACs, to list, according to the Saudi Tadawul Group chief executive.

A SPAC, or special purpose acquisition company, raises money to acquire a private firm with the purpose of taking it public and allowing the target to list more quickly on an exchange rather than via a traditional IPO.

Khalid Alhussan, the CEO of bourse owner and operator Tadawul, said the exchange was discussing business models and assessing appetite for SPACs in the Kingdom, but added that no legal framework had been proposed as yet.

“We are looking very closely to this recent development (about SPACs) and we absolutely look forward to add this element to our market,” Alhussan said after Tadawul made the debut of its shares earlier in the day.

“We have to make sure that this vehicle is in demand by the investors as well as by the issuers,” he said. The bourse, which raised about $1 billion through an IPO, priced its shares last week at the top of the range at SR105 each.

“As far as the market momentum, I think the markets are still very solid, in regards to IPOs. It is just a fantastic time for us,” Alhussan said.

The plans announced by Dubai, which has not had a major IPO since a unit of state-linked developer Emaar Properties in 2017, seek to help the emirate to contend with intensifying competition for capital in the region.

Cabanne said the success of Dubai’s IPOs will depend on factors such as whether the size of the offers are digestible for the market, with price ranges that are deemed appealing to both international and local investors.

There is still plenty of capital to deploy in the region, Cabanne said.

“Certainly between Abu Dhabi and Dubai, we expect a similar investor base ... we would expect to see some discipline in terms of not having similar types of issues going on the same timetable,” he said.

The UAE last week announced it will shift to Saturday-Sunday weekends next year instead of Friday and Saturday, which Cabanne said is a major step to align the UAE with global markets and make it easier for international investors to trade local securities.

The introduction of new products in regional equity capital markets this year, such as a debut exchangeable bond in the UAE or a first secondary marketed equity offering in Saudi Arabia, will also potentially boost the number of new issues in the markets.