After the World Cup, Qatar wants to revive its stock market

Qatar’s stock market will welcome its first initial public offering (IPO) in nearly three years in a test of new regulations introduced by Doha, hoping to compete with more active exchanges in the region.

IT services company MEEZA could raise up to 911 million riyals ($249 million) at the launch of its IPO on Jan. 15 by selling 50 percent of its shares under a new bookbuilding process in Doha, giving companies a price range to test investors’ appetites and determining pricing.

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Qatar, the world’s largest LNG exporter and recent host of the 2022 FIFA World Cup, is turning its attention to diversifying its economy away from gas.

That strategy includes building its stock market by opening it up to a broader investor base and introducing more listings.

Now that the World Cup has been successfully hosted, we see the focus shifting to other areas of diversification, said Osama Ali, HSBC’s head of global banking in Qatar.

Gas-rich Qatar has spent at least $229 billion on infrastructure in an effort to replicate the dramatic transformation of Gulf rivals Dubai and Abu Dhabi in the 11 years since winning the bid to host the World Cup.

The lack of listings has led to a pent-up demand for new IPOs and companies have recognized this and are lining up. Aside from the volatility of global markets, activity in Qatar is expected to pick up in the first half of the year, Ali said, adding that up to six companies could go public through IPOs in the next 18 months.

The new rules introduced by Qatar over the past three years have also shortened the settlement period, with ownership of shares transferred within two days of closing the transaction.

Foreign investors are still not allowed to participate in public share sales, although they are allowed to buy and sell shares of listed Qatari companies.

Qatar missed an IPO boom that swept neighboring Saudi Arabia and the United Arab Emirates last year and market insiders attribute Qatar’s lack of deals to the impact of the coronavirus pandemic and its focus on hosting the World Cup.

Qatar is still classified as an emerging market by index benchmark MSCI. With a market cap of about $158.2 billion, the Doha stock market dwarfs Abu Dhabi’s $718.8 billion and Riyadh’s $2.72 trillion.

The country has plenty of attractive government and family-owned companies that are ripe to be offered to the public and we wouldn’t be surprised to see a healthy pipeline of IPOs in the medium term, said Bassam Slim, a senior portfolio manager at Aventicum Capital Management in Doha.

HSBC’s Ali, who advises key stakeholders in Qatar, expects that allowing foreign investors to buy shares in public offerings will be the next step: Bookbuilding is being tested with this IPO and I believe will eventually be rolled out in phases, in initially with local institutions and then it can even be extended to foreign investors.

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