Rising IPO tide could lift all Gulf boats | Reuters ht @karenkkwok

Rising IPO tide could lift all Gulf boats | Reuters

The Middle East’s great IPO race is hotting up. As Saudi Arabia tries to diversify away from fossil fuels, its capital Riyadh is now a hub for regional initial public offerings, besting United Arab Emirates rivals Dubai and Abu Dhabi. Still, competition need not be a zero-sum game.

Right now, Saudi Arabia’s Tadawul bourse is forging ahead. Its $2 trillion stock market value far eclipses its rivals, and last year the kingdom had nine listings, raising $4.6 billion, according to Dealogic. The deal haul was higher than the two previous years combined. In contrast, Abu Dhabi saw only three IPOs last year after a three-year drought. And its stock market’s average daily trading value is 10 times Dubai’s, which has zero flotations in the past four years.

Dubai may catch up. The UAE government has planned to list 10 state-owned companies on Dubai’s bourse read more , which recently reformed its listing rules. Airline Emirates and utility Dubai Electricity and Water Authority are on the block. Meanwhile, all three Gulf hubs share key advantages.

First, foreign investors are showing genuine interest. When oil giant Saudi Aramco (2222.SE) listed in 2019, attempts to secure lots of overseas blue-chip capital went awry. Since then, overseas investors who won approvals to invest in local markets have grown from hundreds to over 3,000. While Aramco struggled, $20 billion ACWA Power (2082.SE), $5 billion Saudi Tadawul (1111.SE) and the UAE’s $8.5 billion Fertiglobe (FERTIGLOBE.AD) saw foreign interest amount to 40% of real demand, a person familiar with the matter told Breakingviews.