20/11/2017 08:12 AST
GCC companies raised $700 million amongst 13 IPOs in the first-half of 2017, according to consultancy firm EY, suggesting that after only three public issuances in 2016, GCC IPOs are picking back up. The U.A.E. and Saudi Arabia are set to be the biggest contributors going forward, with a number of announced and rumoured IPOs in the pipeline, including ADNOC, Abu Dhabi Ports, Emirates Global, Aramco, Sanaat and Gems Education.
With governments in the region now coming around to the idea of raising capital through the privatization of state-owned assets, the upcoming listings could be exceptionally large compared to historical averages. This makes it an interesting time to take a look back at some of the GCC region’s biggest ever IPOs.
National Commercial Bank (NCB)
Saudi Arabia’s largest bank raised nearly $6 billion in an IPO in 2014, making it the largest IPO in the world after Alibaba in 2014, and the largest ever from the GCC region. The IPO was heavily oversubscribed as retail investors applied for 23 times more shares than the bank offered for sale.
NCB offered 500 million shares through the IPO, nearly 25% of its capital. Investment was restricted to Saudi Arabian citizens only. The 15% retail tranche available to Saudi nationals consisted of 300 million shares, while 10% was allocated to the kingdom’s Public Pension Agency. The stock was priced at $12.
Shares of NCB gained 13% within five days of trading after its initial listing, but dropped 6% over the next 12 months. YTD in 2017, shares of NCB are up 25%. The company’s stock has gained 21% since the IPO.
DP World
The fourth largest port operator globally raised $5 billion in an IPO in 2007. The company was the first to list exclusively on the Dubai International Financial Exchange (rebranded to NASDAQ Dubai in 2008). The IPO was 15 times oversubscribed as investors offered $80 billion for the shares on offer. As a result, during the final allocation DP World issued 498 million extra shares. The company issued 3.8 billion shares in total—23% of its capital.
Following the IPO, DP World was valued at $21.6 billion. DP World’s stock price has declined 16% since its IPO in 2007. However, YTD in 2017, shares of DP World are up 30%.
Saudi Telecom
The largest telecom company in Saudi Arabia sold 30% of its equity in an IPO in 2002, raising nearly $4.1 billion. It was heavily oversubscribed, with investor applications worth nearly $10 billion—2.5 times the number of shares offered. The company sold 90 million shares, of which 60 million were reserved for Saudi citizens, with the remainder being allocated to two public pension funds.
Shares of Saudi Telecom have nearly doubled since its public listing in December 2002. YTD, shares of Saudi Telecom have declined 0.8%.
Alinma Bank
Alinma Bank, formed in 2006, had yet to formally begin business activities when its IPO was announced. Shares were issued to the public in 2007. The IPO raised $2.8 billion from 5.4 million subscribers. The company offered 70% of its capital through 1.05 billion shares. The issue was oversubscribed as investors offered $4.9 billion, 74% more than the value of shares on offer.
The offer was only open to Saudi nationals, for which 70% of the shares were reserved. The remaining 30% were shared equally between The Public Investment Fund (PIF) and two state pension funds—the General Organisation for Social Insurance and the Public Pension Agency.
The bank launched operations in 2008. Shares of Alinma Bank have gained 81% in value since the IPO in 2007. YTD, shares of Alinma Bank have rallied 18.4%.
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Forbes Middle East
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