Saudi Arabia is poised to spearhead the initial public offerings (IPOs) across the Middle East and North Africa (MENA) in 2024, with a remarkable 27 companies planning to debut on the Kingdom’s main stock market. This insight comes from an analysis conducted by the Dubai International Financial Center in partnership with the London Stock Exchange Group.
The report highlights a promising IPO landscape in the MENA region, propelled by companies delaying their listings from 2023 to 2024, anticipating more favorable market conditions. Saudi Arabia stands at the forefront, with 27 firms ready to enter the Saudi Exchange (Tadawul). Moreover, follow-on issuances from major players like Aramco and Savola are also expected, boosting the Kingdom’s market dynamism.
Privatization Fuels Economic Growth
The report underscores the role of privatizing government-backed entities in fostering economic diversification, private sector expansion, and increased sovereign liquidity in the MENA region. This surge in IPO activity has catalyzed significant growth in capital markets, supported by reforms aimed at enhancing market infrastructure and inviting more foreign investment.
Arif Amiri, CEO of DIFC Authority, emphasized the transformative impact of the rise in IPOs across the region. Meanwhile, Nadim Najjar, managing director for Central, Eastern Europe, Middle East, and Africa at LSEG, noted that the MENA IPO market experienced a notable uptick in 2022, driven by Saudi and UAE privatization initiatives amidst prevailing market challenges.
Outlook for 2024 and Beyond
The analysis suggests that the success of IPO activities in 2024 will hinge on global economic stability and the positive performance of recent IPOs. Improved economic conditions are anticipated to boost market optimism, while factors like interest rates and market volatility will play a crucial role in shaping investor sentiment as the year progresses.
Looking at the debt market, the report suggests it will grow modestly, mirroring global trends, as high-interest rates and refinancing costs persist. The trajectory of debt issuance in 2024 will largely depend on interest rate movements, with central banks nearing the end of their rate hike cycles but rates expected to remain elevated longer than anticipated.
Governments in the region are expected to continue driving debt issuance to address budget deficits, refinance existing debt, and fund significant development projects. However, corporate debt issuance may slow due to the persistent high borrowing costs.
