EFG Hermes sees Gulf IPO frenzy from private sector in 2024
04/03/2024 12:28
By Federico Maccioni and Hadeel Al Sayegh
DUBAI, March 4 (Reuters) - Emerging market-focused
investment bank EFG Hermes HRHO.CA is "very bullish" on Gulf
markets this year, expecting more, smaller initial public
offerings (IPOs) from the region from a year earlier, Mostafa
Gad said on Monday.
Smaller deals are likely to become the norm in 2024 as the
private sector becomes the main issuer seeking capital, a boon
for mid-market focused investment banks like EFG Hermes and a
change from large bulge bracket deals from government
privatisations, investment banking head Gad said.
"The inflow [of issuers] is coming more from the private
sector. For banks that require a certain amount of a certain
magnitude of offerings for them to justify their presence, maybe
they can struggle a bit", Gad said in an interview with Reuters.
Gad said his bank tends to focus on deals between $300
million and $700 million, and added he would like to see the
team, which currently has 50 bankers covering the region, expand
and is looking to hire junior analysts.
The Gulf has bucked expectations of a muted start to the
year with public share sales from Dubai's public parking space
operator Parkin, Saudi Arabia's Modern Mills, and Saudi
healthcare firm Avalon Pharma.
Bankers are rushing to get deals done before Ramadan and
before markets close during the celebratory Eid holiday and
ahead of the summer, leaving a few weeks to launch several IPOs
in the region. Ramadan is expected to start next week while Eid
is forecast to take place around mid-April based on the lunar
calendar.
"We will have a very crowded window from Eid to summer. Post
Eid to summer, I think it is very, very crowded" before the
window reopens in September, he said.
Most of the deals are likely to come from Saudi Arabia, the
United Arab Emirates (UAE) and there is an increase of activity
from Kuwait, he said. Oman is now getting more attention from
the global banks, he added.
Oman's state energy firm OQ started its privatisation
programme last year and floated its pipeline business through
the sale of a 49% stake, raising $771 million. OQ also floated
its oil and gas drilling business Abraj Energy Services, which
raised $244 million also last year.
Among the private companies that are expected to go public
this year are UAE-based supermarket chains Spinneys and Lulu,
Reuters has previously reported.
Saudi Arabia's Milling Company 3, one of several flour
milling privatisations in the kingdom, is also planned for 2024.
Companies domiciled in the GCC raised $11 billion in IPO
proceeds in 2023, down 45% from 2022. GCC IPOs accounted for 40%
of proceeds raised in EMEA during 2023, down from 56% during
2022, LSEG data showed.
(Reporting by Federico Maccioni and Hadeel Al Sayegh in Dubai.
Editing by Anousha Sakoui and David Evans)
((Federico.maccioni@thomsonreuters.com; +971 50 2677574;))