GCC companies are increasingly engaging legal experts in preparation to go public, the MENA head of prominent law firm DLA Piper told Arabian Business.
The number of initial public offerings (IPOs) has fallen significantly since the 2008-09 debt crisis, with numerous planned listings being indefinitely postponed or cancelled and few new ones emerging.
Only five companies listed on GCC stock exchanges during the first half of this year, raising a mere $385m, according to PricewaterhouseCoopers (PwC).
But analysts have suggested the market is becoming more attractive for businesses that had put off planned IPOs as well as new considerations.
“We’re doing a lot of capital markets work in specific countries, predominantly in Kuwait where there’s a lot of activity following the [new] capital markets authority law,” DLA Piper Middle East partner Abdul Aziz Abdullah Al Yaqout said.
“I personally predict we’re going to be seeing more capital markets activity across the region in the next few years, specifically looking at IPOs in the region, but also IPOs … outside of the region; we’re seeing more and more of that.
“[Assisting with IPOs] is something we’re going to be looking at capitalising on.”
Al Yaqout said GCC companies were eyeing stock markets overseas such as London, Singapore, Johannesburg and, to a lesser extent, New York.
Abu Dhabi based Al Noor Hospitals Group listed 33 percent of its equity on the premium segment of the London Stock Exchange (LSE) earlier this year, raising $342m – nearly equal to the total of all funds raised in the GCC during the first half.
LSE senior executive Richard Webster-Smith told Arabian Business in March he expected “a couple” of Gulf companies to launch on the bourse this year.
“There’s confidence returning in a number of sectors, be that property, tourism, leisure, and general market confidence returning globally is leading to a number of other opportunities for us for listings from the region,” he said.
Europe’s IPO markets have been far more successful than those in the Gulf so far this year, with $11.1bn raised in the first six months, according to PwC.
CEO of financial services firm Daman Investments, Shehab Gargash, has previously criticised UAE market regulations for restricting the number of new listings.
“I think it’s a little too restrictive today. I frankly think smaller companies should have access to primary markets; they don’t have that much access,” Gargash said in July.
“Less profitable companies should have access as long as you do proper declarations.
“I think also the ability to value should be more flexible than it is today. The laws governing IPOs today are a little too rigid and thus tend to limit how many companies are really groomed and beautified to go to market.”
KPMG partner Abdul Wahab said the intense scrutiny and corporate structure associated with going public also turned off more than half of all UAE family businesses that began preparing for a public float.
Dubai markets have not had a major public listing since Drake Scull International in 2008.
In December, Al Habtoor Group, owned by one of the wealthiest UAE families, postponed its planned $1.6bn listing, in what would have been one of the largest IPOs in the UAE’s recent history.