LEADERSHIP | SHAREHOLDER VALUE
Exceeding shareholder expectations is the single most important performance indicator to attracting and retaining professional investors
Craig Bouchard Founder & Executive Chairman , Ecolution kWh , LLC Or did it ? Has the relentless pursuit of shareholder value at all costs gone out of fashion in the face of sustainability and societal pressures ? And what difference does it make if you are a company based in Denver , Dusseldorf , Dubai or New Delhi ?
One fact is certain – you cannot ignore the importance of shareholder value in the Middle East & Africa region . According to the latest available data from the World Bank ( which is admittedly a couple of years old but important for context ), the market capitalisation of domestic listed companies in Saudi Arabia – the regional leader – is US $ 2.43 trillion . That is skewed , of course , by the 2019 listing of Saudi Aramco , which recently ( July 2023 ) valued the company at just over US $ 2 trillion .
While Saudi ’ s total may be dwarfed by the likes of the US ( US $ 40.72 trillion ) and China ( US $ 12.21 trillion ), it is more than the rest of this region combined .
South African companies are valued at US $ 1.02 trillion , the UAE at US $ 294.83 billion ( more on that to come ), and Israel at US $ 262.906 billion . Even Egypt with its population of more than 100 million people only boasts domestic listed companies worth US $ 41.35 billion .
This highlights disparity around the world , with some countries having more of a focus on government- or family-owned large businesses , making the concept of shareholder value in those countries less significant .
But that is changing – and fast . With company listings booming on exchanges from Abu Dhabi to Alexandria , that means more shareholders in the region and greater expectations on profits .
Abu Dhabi Securities Exchange ( ADX ), for example , is showing strong growth that makes a mockery of those old World Bank figures . The total market cap of ADX passed US $ 760 billion ( July 2023 ) up from US $ 545 billion just a year earlier – a 40 % hike fuelled by highprofile and high-demand IPOs like G42 ’ s Presight AI . That US $ 496 million IPO was oversubscribed by an astonishing 136 times .
In March 2023 , ADNOC Gas completed the largest-ever IPO on the ADX and the largest IPO this year at US $ 2.5 billion .
Middle East IPOs raised more than US $ 23 billion in 2022 from 48 listings . That is compared to just US $ 7.5 billion from 20 offerings in 2021 .
54 September 2023