BofA: Some Middle Eastern companies postpones plans for IPO ‎until 2024‎

A senior executive at Bank of America said that several companies in the Middle East are planning initial public offerings in 2024 instead of this year, amid fears of a global recession.

According to Reuters, the global initial public offerings market has been witnessing a recession since the beginning of 2022, when the Russian invasion of Ukraine and high inflation led to a decline in risk appetite, as investors feared the relentless interest rate hikes.

But the Middle East emerged as a bright spot for initial public offerings last year and has largely continued to do so so far, with several companies listing on stock exchanges in Saudi Arabia and the UAE in the first half.

In response to a question about expected initial public offerings for this year, James Palmer, head of capital markets for Europe, the Middle East and Africa at Bank of America, said, “The path is encouraging, although we do not expect a huge wave in the second half. Many operations are focused more on early or mid-next year, rather than the end of this year

He declined to explain by citing specific examples

“Importantly, the market’s view of when we hit the highs continues to be dynamically evaluated and fuels uncertainty,” Palmer added. This is a market challenge that we need to go through.”

At its latest policy meeting, the US Federal Reserve halted the 15-month cycle of rate hikes, the most aggressive in decades. However, the markets expect a new increase in the interest rate at the next meeting this month.

Palmer said that some companies in the Middle East “have a good feeling about confidence in the structural transformation in the region, that is, the commitment in the region to developing and advancing capital markets, and the commitment of local entities to show them financial support.”

The wave of initial public offerings in the Gulf that began last year was driven by state-led listing programs in Saudi Arabia, Abu Dhabi and Dubai.

Palmer said he believes the appetite of foreign investors for IPOs in the Middle East continues.