Saudi Tadawul writes off $931m public debt instrument at maturity

RIYADH: Gulf markets had a record year for initial public offerings, benefiting from a war-induced spike in oil prices.

Gulf Cooperation Council exchanges have seen a surge in foreign inflows despite continued global volatility, which has sent stocks to their lowest levels in years on inflation and interest rate concerns.

The Saudi stock market raised nearly $9.3 billion through 15 IPOs last year, making it one of the busiest markets in the Middle East and Africa.

Tadawul, or the Saudi Stock Exchange, maintained its momentum in 2022, as it listed 17 companies, raising $5.07 billion from IPOs in the first half of the year.

The main TASI index had eight listings generating $4.4 billion, and the parallel market Nomu had nine listings worth $649 million.

Among the top initial stock sales were Elm Co., Nahdi Medical Co. and Al-Dawaa Medical Services Co., which sold off in record time.

Elm, the Saudi Public Investment Fund’s digital security company, ranked second among all high-flying stocks in the first half of 2022, gaining 70% since listing this year.

Al-Dawaa Medical Services Co., whose IPO was 2,515% oversubscribed, has suffered a 9% decline in share price since listing.

Its pharmaceutical rival Nahdi, however, has seen a 9% jump in its share price since its market debut, after the retail tranche of its IPO was oversubscribed 13 times.

The surge in IPOs has further boosted the value of foreign ownership in the Kingdom, which reached SR450 billion ($119.72 billion) at the end of the first quarter of 2022, an increase of 209 % compared to the same period last year.

The listed companies in Saudi Arabia with the largest participation of foreign investors are Alinma Tokio Marine Co., Arabia Insurance Cooperative Co. and United International Transportation Co., with 29%, 28% and 27% foreign participation respectively.

The Saudi stock market also saw an 85% growth in GCC ownership to SR60.6 billion at the end of the first quarter of 2022, from SR32.7 billion two years ago.

Even as the Saudi market led the region in initial equity sales in the first quarter of 2022, GCC peers have also witnessed a wave of IPOs since the start of the year.

The outlook for the region is positive and the IPO rally is only expected to surge for the rest of the year as many companies line up for share sales in the oil-rich region.

Here’s a look at some of the biggest GCC IPOs in 2022:

Dubai Electricity and Water Authority

The Dubai Electricity and Water Authority was one of the biggest IPOs of the year globally. The public utility raised $6.1 billion and attracted orders worth $86 billion from investors. The offering marked the biggest regional IPO since Saudi oil giant Aramco raised more than $25 billion in 2019.

Nahdi Medical Co.

Pharmaceutical chain operator Nahdi Medical Co. completed a $1.36 billion IPO on Saudi Arabia’s main stock market in March. Operating across the Kingdom and in the United Arab Emirates, the company had a market share of 31% of total pharmacy sales in the Kingdom at the end of 2021.

borouge

The $2 billion IPO of petrochemicals maker Borouge has drawn $83 billion in orders from Abu Dhabi’s biggest-ever share sale. Borouge, which is a joint venture between Abu Dhabi National Oil Co. and Austrian chemicals producer Borealis, sold nearly 3 billion shares, representing 10% of the capital. The IPO has attracted interest from high-profile investors, including the world’s largest asset manager BlackRock Inc. and Fidelity.

TECOM Group

Dubai business park operator TECOM Group raised $454 million by selling 625 million shares in an IPO, with an offering price of $0.73 per share. The global offering attracted substantial demand from institutional and retail investors, with total gross demand of $9.6 billion and an oversubscription level of 21 times.

Abu Dhabi Ports

Abu Dhabi Ports, one of the region’s leading logistics enablers, sold 1.25 million shares in an IPO worth $1.1 billion. Even though the shipping sector has been hit by supply chain issues, the port operator’s IPO was a success as it attracted investor interest and debuted strongly in the Abu Dhabi Stock Exchange.

Elm Co.

PIF-owned, Riyadh-based digital security firm Elm Co. raised $820 million through an IPO. The final offer price was $34.1 per share, the upper end of an indicative range.