UAE Business: Less than one-third of IPOs in GCC succeeded in 2021: study – Gulf Digital News

UAE Business: Less than one-third of IPOs in GCC succeeded in 2021: study – Gulf Digital News

Only one-third of the 38 IPOs (Initial Public Offering) in the GCC succeeded in 2021, although it was the best year for new listings since 2007.

Specifically, just 38% of IPOs were priced adequately - the majority of companies leave too much money on the table. Only 32% of companies traded within the typically desired share price range of 20% within the first 30 days of going public. And merely 31% of new listings outperform companies that are already listed in the longer term.

These are among the findings of a new report published by Iridium Advisors, entitled “The Renaissance of IPOs in the GCC,” that examines the success rate of company listing and demystifies some common misconceptions about IPO winners and losers.

Criteria for success

Iridium’s analysis of 457 initial public offerings in the GCC region between 2005 and 2021, benchmarked companies against three objective criteria of success:

*Underpricing: the difference between the IPO offer price and the first-day closing price;

*Stabilisation period: the 30-day period of price stabilisation post-listing; and

*Excess return: the relative company share price versus a country index over time.

Opportunity to re-energise

“It is very encouraging to see government-owned and private companies embracing public equity markets in the GCC,” says Oliver Schutzmann, CEO