#482
Under The Mediterranean Sun: A Bright Spot Of Activity
Published:
Apr 03, 2023
Author:
Sarah Parsons Wolter
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Going public locally was always a challenge for startups in the Middle East. Despite having the 10 largest sovereign wealth funds managing over $4t in assets (more than the GDP of France or the UK), investments only flowed from the Gulf “outward.” But the sands are shifting. A wave of entrepreneurial energy is sweeping the desert, with visible interest from foreign institutional investors, asset managers, venture capitalists and hedge fund managers.
In what has otherwise been a stagnant year in the global IPO markets, the Middle East recorded 51 IPOs, raising $22b, making it the only place in the world to post a YoY increase in private investment value, with Saudi Arabia leading the pack.
The going-public playbook starts with state owned enterprises, followed established conglomerates, and finally tech and newborn companies. Ever since plans were announced to float state oil giant Aramco on the public exchange, which resulted in a ~$30b share sale, international banks have been courting the Kingdom, vying for a slice of the IPO frenzy. The Emirates ran a similar playbook, with Adnoc Gas raising $2.5b in the Emirate’s biggest IPO to-date and launching a slew of subsequent IPOs across state-related entities from utility Dewa to road-toll Salik.
Family-owned businesses make-up over 90% of the private sector in the Gulf, ranging from shopping mall conglomerates to retail and hyper-market chains, all of which are receiving strong encouragement to IPO.
In the next phase, homegrown, tech-enabled companies will be the natural extension of this burgeoning market: The younger tech cohorts claiming their moment in the spotlight in one of the fastest growing investment destinations in the world. Investors and founders alike are sure to be in for a wild ride.
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