Market is now underwater, European issuance and the majority of deals are collapsing into the repeat of underperformance. But the Middle East played the game so well that despite the worst scenario, more deals remain on the ground. Thus, markets are eyeing the Middle East, especially Abu Dhabi. Borouge, a plastics company, started pre-marketing a 10% all-secondary IPO. The deal expectation should be around $2bn with the value of $20bn.
More deals are coming, following the UAE first SPAC IPO. Petro Rabigh for instance set for a $2.1bn terms of rights issue. So far, the total of all EMEA equity issuance has doubled in 2020, from 2.8% to 4.4% in 2021. Meanwhile in Europe, there have only been just three non-SPAC IPOs in 2022. Those three even trade below the IPO prices. The current deals in the market are Lhyfe, French green hydrogen business and real estate business Epic Suisse.
Lhyfe was due to close books on its at least €110m IPO. Then, Epic Suisse covered and due to close on May 24. A banker on the Borouge deal argued that there has been a very significant demand for the float. Basically, the limited European issuance provides momentum for Borouge as the market only works in the Middle East right now.
A head of ECM on Borouge’s deal agreed by saying that the interest is on the ground because there is so little activity elsewhere. So, people can gain more confidence in the market since the region provides a consistent and stronger economic base. The head of ECM said that there is quality spinout assets demonstrating historic and future growth, so it is performing well. In addition, discounts are still available on the specifics deals with the prospects of growth in the company. Although, the company does not have to apply for a Ukraine geopolitical discount.
