Citigroup Inc. joined Goldman Sachs Group Inc. in predicting that the Persian Gulf’s boom in initial public offerings is far from over.
Miguel Azevedo, the Wall Street firm’s head of investment banking in the region, expects the flurry of activity to extend into next year with about 10 more listings. “Next year should be at least as good as this year,” he said in an interview with Bloomberg TV on Tuesday.
More family-owned companies, as well as tech and tech-enabled firms, are likely to come to the market in 2023, rather than the stream of government-owned entities that have sold shares this year, Azevedo said. Citigroup, which uses local bankers and international experts to work on deals, has increased its regional investment banking team by 50% over the past two years to handle the flurry of deals, he said.
IPOs in the Persian Gulf have been on a tear this year, fetching $18.5 billion — almost half of the proceeds seen in Europe, the Middle East and Africa. The region is headed for its second-best year on record in terms of money raised from share sales, eclipsed only by 2019 when Aramco pulled of its record $29.4 billion listing.
The rush of deals has continued into the latter half of the year.
Americana Restaurants International Plc, the Middle Eastern operator of KFC and Pizza Hut outlets, is set to raise up to $1.8 billion this week. Riyadh Cables Group Co. priced its $378 million IPO at the top of the range on Sunday after drawing $27 billion in orders, while Taaleem Holdings PJSC’s Dubai listing was 18 times oversubscribed.
Citigroup’s optimism for next year’s deal flow echoes that of rival Goldman, which expects the IPO frenzy to continue as demand for regional assets grows. Goldman has several IPO mandates, which it sees materializing in the next 12 months, Zaid Khaldi, co-head of Middle East and North Africa, said in a recent interview.
Citigroup ranks fourth after Goldman Sachs, HSBC Holdings Plc and EFG Hermes among banks that have worked on the most listings in the Persian Gulf this year, according to data compiled by Bloomberg.
Demand is coming both from local and international buyers, and the secondary market has been “positive but not tremendous,” according to Azevedo.
“We’ve been pricing these IPOs in very difficult markets so we cannot forget that,” he said. “Provided we get a pop up after the IPO then everybody will be fine.”
