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Emerging Trends in IPOs: The Persian Gulf's Rise to Prominence

Jonathan Wong

Jonathan Wong

26 September 2023

In contrast to many IPO markets, the Persian Gulf nations have recently experienced a significant increase in large first-time public equity offerings. This phenomenon is attributed to a unique combination of factors, including business-friendly government policies, rising oil and gas prices, and new market regulations aimed at aligning local practices with global standards.

While the global capital markets faced challenges in 2022 due to factors like the war in Ukraine, high inflation, and surging interest rates, the Gulf countries, particularly Saudi Arabia and the UAE, have emerged as IPO hotspots. In 2022, Gulf companies raised over $22 billion through IPOs, accounting for more than half of the total IPO funding in the Europe, Middle East, and Africa (EMEA) region. The second quarter of 2023 alone witnessed 35 IPOs in the EMEA, with around 42% of the year-to-date proceeds originating from UAE-based companies.

The rise of IPOs in the Gulf is driven by regulatory reforms that enhance transparency and credibility. The Saudi Capital Market Authority, the Abu Dhabi Securities Exchange, and the Dubai Financial Market have made comprehensive regulatory changes to align with international standards. Combined with robust oil and gas prices, these reforms have made the Gulf region an attractive destination for new listings.

Looking forward, the Gulf region is poised for continued growth and innovation. Initiatives to diversify economies, attract foreign investment, and the emergence of startups, including unicorns, indicate a promising future for IPO markets. As the region's appeal to investors grows, the possibility of dual listings between Middle Eastern exchanges and international markets becomes a notable trend to watch.