An unprecedented increase in initial public offerings (IPOs) is expected in the region – especially in Saudi Arabia, the UAE and Kuwait – according to the Gulf Investment Corporation, owned by GCC governments.
High liquidity, increasing rates of economic growth in Gulf countries, the desire by many family-run companies to become joint stock firms and the diversity of investment channels is likely to greatly increase the average number of IPOs in the coming period, senior officials of the corporation told Emirates Business yesterday.
Head of the GCC Equities Division Talal Al Tawari said: "We expect a huge rise in the number of IPOs in all countries of the region, and in Saudi Arabia, the UAE and Kuwait in particular."
And Head of Business Development at the corporation, Malek Essa Al Ajeel, said IPOs in the Gulf are on the rise due to the growing number of family companies that would like to shift into joint stock firms.
Al Ajeel also said economic growth has risen substantially due to oil revenues and will contribute to the phenomenon.
"I expect IPOs to redouble in the UAE and Saudi Arabia, while they will go down in Bahrain and Oman."
Meanwhile, Al Tawari said participation by foreign investors in the ownership of Gulf companies is also on the rise and he rejected the idea that the phenomenon should raise fears.
As an example, he said the number of foreign investors in the Distinguished Gulf Fund, launched by the corporation five years ago, has risen from less than two per cent to 40 per cent.
He added foreign participation has only served to benefit the fund and reflects growing international interest in Gulf markets.
The fund's capital has grown from $100 million (Dh367m) to $250m, at a growth rate of 282 per cent, he added. This year it recorded 11.23 per cent growth.
GCC member states representation in the fund varied by country – Kuwait has 28 per cent, Saudi Arabia (28 per cent), UAE (19.5 per cent), Qatar (11 per cent), Oman (six per cent) and Bahrain (three per cent).
On the UAE's investment in the fund, Al Tawari said it is 12 per cent by banks, 50 per cent by finance and real estate companies and 38 per cent by industrial firms.
Al Ajeel said the corporation is currently running assets in excess of $9bn, including $3.5bn currently invested in the Gulf region.
Of these are direct investments worth $1.5bn in petrochemicals, iron and steel, electricity and water.
Also $700m is invested in Gulf financial markets and $1bn in stocks.
For the future, Al Ajeel said the corporation plans to increase the assets it is running over the next three years at an annual growth rate of eight to 10 per cent.
And he put the corporation's foreign investments at some $5.5bn.
The corporation is also planning to launch share funds in each Gulf country, he added, and to introduce a direct investment fund in the Gulf with a value of $500m to $700m.