MBC Group emerges as global IPO star with unprecedented share surge

The share price of the Middle Eastern broadcasting giant MBC Group skyrocketed by more than twofold, making it the world’s top-performing listing for the year, Bloomberg reported on Thursday.

This surge, a 134 percent increase since its debut on the Riyadh stock exchange on January 8, follows a substantial $222 million listing and positions MBC Group as the frontrunner among IPOs globally that raised at least $50 million, according to data compiled by Bloomberg.

The Middle East, particularly the Gulf, stood out as a vibrant hub in an otherwise lackluster global IPO market over the past two years, Bloomberg added. Fueled by robust oil prices and concerted efforts by regional governments to bolster their capital markets, the region has witnessed a consistent and strong demand from investors, especially local buyers.

MBC Group, as the largest broadcaster in the Middle East, became a household name in the region. Investors placed their confidence in the company’s streaming platform, tailored to the MENA region. Christian Ghandour, senior portfolio manager at Al Dhabi Capital told Bloomberg, “As more IPOs enter regional markets, investors finally have a chance to gain exposure to sectors that were never represented on the equity markets.”

JPMorgan Chase & Co. analyst Alexey Philippov attributed the stock’s gains to a scarcity premium. Despite initiating coverage with a neutral rating, the stock experienced a decline over three consecutive sessions due to profit-taking, Bloomberg argued.

According to Bloomberg, the flourishing IPO market in the Gulf sharply contrasted with the subdued listing activity observed in Europe, the US, and various parts of Asia. Investors in these regions have hesitated to support new companies, influenced by uncertainty surrounding interest rates and a persistent gap in valuation expectations between buyers and sellers.

Conversely, investors in the Middle East are exhibiting insatiable demand, partly due to the often modest stakes offered. MBC Group, for instance, received orders worth $14.5 billion from institutional investors, a staggering 66 times the shares made available to them, despite only selling 10 percent of the company in the IPO, Bloomberg reported.

Saudi Arabian pharmaceutical firm Avalon Pharma’s announcement on Wednesday added to this trend, with institutional order books for its $131 million IPO being 139 times covered. The orders were valued at 68.3 billion riyals ($18.2 billion). This robust demand aligns with the Kingdom’s benchmark index surging over 18 percent from an October low, echoing global benchmarks’ optimism that major central banks, including the Federal Reserve, will cut interest rates this year.

However, amid this economic optimism, Bloomberg argued, the ongoing tensions in the Middle East continue to pose a risk to regional stock markets, serving as a reminder of the delicate balance between economic progress and geopolitical uncertainties.