DUBAI, UAE — In the ever-evolving GCC landscape, public markets serve as vital indicators of economic health, reflecting the region’s transition from oil dependence to diversified economies.
In the third quarter of 2023 alone, six Initial Public Offerings (IPOs) collectively raised a significant US$ 419 million, with Saudi Arabia leading with five listings and Qatar contributing one.
The announcement of an IPO by the Dubai Taxi Company, offering 25 percent of its share capital, adds a new dimension to the GCC’s financial narrative.
At A Glance GCC Markets Transitioning from Oil * Reflecting the shift from oil dependence to diversified economies in the GCC region. Significant IPOs in Q3 2023 * Six IPOs raised US$ 419 million, led by Saudi Arabia with five listings and Qatar with one. Dubai Taxi Company IPO * Introduction of a significant IPO, offering 25 percent of its share capital. UAE as a Financial Hub * Strong public market framework with ADX and DFM as key exchanges. * Bahraini asset manager Investcorp Capital's milestone with a US$ 451 million public listing. * Dubai Taxi Company's expected dividend payout of at least AED 71 million in April 2024. Dubai's State Companies' IPO Initiatives * Strategy to take ten state-owned companies public, aiming to double capital market size to US$ 817 billion. Saudi Arabia's Public Market Dynamics * Tadawul attracting global investors; lighter listing platform Nomu supports diverse company IPOs. * Jamjoom Pharmaceuticals' significant IPO raising US$ 336 million. Saudi Arabia's Vision 2030 Alignment * State-owned companies like Saudia Technic gearing up for IPOs in alignment with Vision 2030. PIF's Transformative Role in 2023 * Significant strides with assets exceeding US$ 776.6 billion. * Key driver of economic growth and investment, supporting Vision 2030 goals. * Strategic focus on innovative industries and sustainable economic growth. PIF's Key Agreements and Acquisitions in 2023 * Agreement with LONGi Green Energy for solar product manufacturing. * Establishment of indoor vertical farms with Aerofarms in Riyadh. * Acquisition of a 30 percent stake in Saudi Tabreed. * Transfer of 4 percent of Aramco ownership to Sanabil Investments. * Establishment of Livera for pharmaceutical investments. * Launch of Saudi Tourism Investment Company "Asfar" to boost local tourism.
UAE’s Robust Public Markets
As a global financial hub, the UAE boasts a strong framework for public markets, highlighted by prominent exchanges such as the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM). Both exchanges actively trade equities, funds, and bonds, playing a key role in diversifying the UAE’s economic landscape.
- Recent Developments
ADX celebrated a milestone with Bahraini asset manager Investcorp Capital generating US$ 451 million through a successful public listing.
DFM’s headlines have been dominated by the anticipated IPO of the Dubai Taxi Company, with an inaugural dividend payout expected in April 2024, estimated at at least AED 71 million (US$ 19.3 million).
- State Companies’ IPO Initiatives
Dubai’s strategy to take ten state-owned companies public aims to double the size of its capital market to US$ 817 billion and attract foreign investment. The Dubai Water and Electricity Authority (DEWA) has already marked its presence as the largest IPO in Europe and the Middle East since Aramco, raising an impressive US$ 6.1 billion.
Saudi Arabia’s Dynamic Public Market
Saudi Arabia’s Tadawul, functioning as the stock exchange, has become a magnet for global investors seeking opportunities in the region’s largest economy. Nomu, operating as a parallel equity market, offers a platform with lighter listing requirements, encouraging a diverse range of companies to go public.
- Recent Developments
Jamjoom Pharmaceuticals emerged as Saudi Arabia’s most significant IPO of 2023, raising US$ 336 million.
- State-Owned Companies’ IPOs
In a strategic move aligned with the Vision 2030 initiative, Saudi Arabia is allowing its state-owned companies to conduct IPOs. This shift is designed to foster transparency, diversify the economy, and open new avenues for public investment. Saudia Technic, the aircraft maintenance subsidiary of the state-owned Saudia Group, is preparing for an IPO in 2028 or 2029.
PIF’s 2023 Recap
The year 2023 has been transformative for the Gulf Cooperation Council (GCC), particularly highlighted by the significant strides of the Public Investment Fund (PIF) in Saudi Arabia. With assets exceeding US$ 776.6 billion, the PIF has been pivotal in the economic landscape, executing numerous deals and strategic acquisitions in line with the ambitious Vision 2030 goals.
The PIF’s role in the Kingdom extends beyond accumulating vast assets. It is a key driver of the economy and investment, actively participating in foreign visits by Kingdom officials and engaging in strategic acquisitions. The PIF plays an instrumental role in realizing Vision 2030’s objectives, aiming not only to be a global sovereign fund giant but also to pioneer projects in promising sectors, diversify the non-oil Saudi economy, and propel the Kingdom toward greater prosperity and development.
The PIF’s investments strategically focus on opening new horizons for future industries. By fostering innovative and creative projects, the Fund seeks to create ambitious job opportunities, support private sector growth, and lead the Saudi economy towards a promising and bright future. This forward-looking approach positions the Kingdom as a hub for cutting-edge industries and sustainable economic growth.
Key Agreements and Acquisitions in 2023
On January 4, 2023, the PIF signed a critical agreement with LONGi Green Energy Technology to localize the manufacturing of solar energy products in Saudi Arabia. This initiative is in line with the global shift towards renewable energy and underscores the Kingdom’s commitment to sustainable development.
- Establishment of Indoor Vertical Farms with Aerofarms: A groundbreaking agreement was reached with American Aerofarms to establish indoor vertical farms in Riyadh. This initiative aims to optimize natural resources, enhance agricultural efficiency, and contribute to the Kingdom’s food security goals.
- Acquisition of a 30 Percent Stake in Saudi Tabreed: In February, the PIF completed the acquisition of a 30 percent stake in the Saudi District Cooling Company, Saudi Tabreed. This strategic investment bolsters the Fund’s efforts in developing service facilities and promoting low-carbon industries within the country.
- Transfer of 4 Percent of Aramco Ownership to Sanabil Investments: A major announcement was made by Saudi Crown Prince Mohammed bin Salman on April 16, 2023, regarding the transfer of 4 percent of Aramco’s shares from state ownership to Sanabil Investments, wholly owned by the PIF. This move is aimed at the long-term strengthening of the national economy and diversification of resources.
- Establishment of Livera for Pharmaceutical Investments: In June, the PIF announced the creation of Livera, a pharmaceutical investment company. Livera is focused on enabling the sector’s growth by producing biopharmaceuticals on a commercial scale in Saudi Arabia, underscoring the Kingdom’s commitment to advancements in healthcare and the pharmaceutical industry.
- Launch of Saudi Tourism Investment Company “Asfar”: In July, the PIF introduced the Saudi Tourism Investment Company “Asfar.” Dedicated to bolstering the local tourism sector, Asfar plans to invest in various tourism projects throughout the Kingdom. These investments aim to develop attractive destinations in the hospitality, entertainment, retail, and food sectors, further enhancing the country’s tourism appeal.