An Overview of IPO Readiness and Future Trends in the GCC Region

There has been a recent surge of mega listings across the Gulf, driven by Saudi Arabia and the United Arab Emirates. Investors from around the world are increasingly attracted to the promise of substantial dividends from promising industries and innovation across the region.

Nations in the GCC region are actively taking advantage of the increasing demand and high energy prices to publicize state-owned businesses. Are you planning to be a part of the booming Initial Public Offering shift? Will your company benefit from going public? Are you IPO-ready? Here is all you need to know about IPO readiness and upcoming trends in the Gulf region.

Why An IPO?

An initial public offering does the following:

• It provides real-time access to finance.
• It improves the public’s view of a company by making it more credible and visible.
• It makes it very easy for a company to establish share option plans for its workforce. These plans will serve to motivate employees and help the company find good staff.
• It also enriches capital markets with fresh concepts and investment possibilities.

Putting together an IPO requires careful planning and preparedness.

What is IPO Readiness?

When a business is IPO-ready, it has all the systems in place to comply with the legal requirements for selling stock to the public. These systems include:

• Internal controls
• Financial reporting
• Governance

This information will be available to investors on demand from when your business goes public and throughout the IPO process. Investors, analysts, and the media will closely examine your company’s internal operations and financial data. Moreover, new public firms must adhere to a mass of additional reporting and legal requirements for the duration of their existence.

Why You Need IPO Legal Cover

It is undeniable that you will require competent legal representation if you are commencing the process of making your business public. There are many different aspects to this process that your company must be acutely aware of. If you forget any one of them, the results could be unfortunate.

Legal and professional fees will be recurring expenses, however they are imperative in developing and managing the following:

• Putting together, submitting, and finishing the listing application.
• Providing guidance on the dangers and laws surrounding the IPO transaction, such as publicity and transparency.
• Giving direction on the functions of the leading regulatory players, exchange listing requirements, and securities regulations.
• Counter-examining and confirming everything to ensure no problems would subject the company to lawsuits after the IPO.

IPO Trends in the Middle East to Look Out For In 2022 And Beyond

Bloomberg data shows that IPOs in the Middle East have raised $11.4 billion during the first five months of this year. This is more than any other year’s first six months. Since petrochemicals company Borouge started trading in Abu Dhabi earlier this month – raising $2 billion – the sum will only go up.

For this year, the energy industry is one of the few bright spots for IPOs. This is because oil prices have gone up by 50%, helping Gulf economies and equity markets. Share sales in Europe are at their lowest level in 20 years because of high inflation, rising interest rates, and a depressed economy in general. In contrast, the Middle East has more or less managed to avoid these problems and has continued to successfully attract investors from other countries.

Trends Beyond the Oil Sector

In recent years, diversification has become a top priority for GCC governments. The recovery is being driven by growth in areas other than oil. Sectors like monetary services are doing well since the pandemic. The key to Saudi Arabia’s economic regeneration is its vast domestic market and the government’s commitment to big projects.

Enterprises praise their forward-thinking policies and methods. With half of the world’s people only an eight-hour flight away, the Middle East has now become a true economic powerhouse. It serves as a prime mover for trade, exchange, advancement, and revenue generation.

GCC trade growth will be bolstered by the hope that supply chain slowdowns and cross-border activity delays are set to improve in the next few quarters. If you have been thinking of an IPO, this might be the right time to start getting ready.

In summary

The proliferation of 5G technology and the growth of online platforms and marketplaces are leading to new ways to run successful businesses. As a result, the regional business environment will change in a way that will significantly affect economic patterns and social dynamics. The GCC’s non-oil industries will continue to lead the economy over the next ten years, giving the regional markets and stock prices an immense boost.

What does this mean for you? It simply means that you ought to prepare adequately for that coming IPO. Having the right legal support team by your side is key to making this happen.

By Hammad & Al-Mehdar, Saudi Arabia, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact saudiarabia@transatlanticlaw.com

Disclaimer: Transatlantic Law International Limited is a UK registered limited liability company providing international business and legal solutions through its own resources and the expertise of over 105 affiliated independent law firms in over 95 countries worldwide. This article is for background information only and provided in the context of the applicable law when published and does not constitute legal advice and cannot be relied on as such for any matter. Legal advice may be provided subject to the retention of Transatlantic Law International Limited’s services and its governing terms and conditions of service. Transatlantic Law International Limited, based at 42 Brook Street, London W1K 5DB, United Kingdom, is registered with Companies House, Reg Nr. 361484, with its registered address at 83 Cambridge Street, London SW1V 4PS, United Kingdom.