The importance of shareholder value as regional IPOs boom

The concept of shareholder value is changing, but with IPOs in the Middle East soaring, how can CEOs meet stakeholder expectations and deliver?

When considering the future of shareholder value, we have to look at the history. You have to go back to the dark economic times of the 1970s – a period of global stagnation. Open the pages of The New York Times and you’ll find an essay by a certain Milton Friedman titled ‘The Social Responsibility of Business is to Increase its Profits’. Economist Friedman effectively said that an organisation should show no regard or responsibility for anything other than its shareholders.

As often happens with unpopular new concepts, it took a few years for other voices to echo Friedman’s doctrine, and it was not until the 1980s that the pursuit of shareholder value at any cost became the new purpose for doing business.

And it worked. Shareholders made fortunes, and stock exchanges from New York to London to Tokyo all benefitted – right up to the 2008 financial crisis which pulled the plug on Gordon Gecko’s ‘greed is good’ mantra. 

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 high-profile 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.

So with all of these listings, what do regional CEOs need to know about the changing nature of shareholder value?

Barbara Spitzer

Shareholder value as important today as ever

“In emerging markets, many large companies are family-controlled or state-controlled. These companies may prioritise family or national interests over minority shareholders,” says Barbara Spitzer, Managing Director, Northeast Market Lead of Board and CEO Advisory at Accenture, as well as the MD and Global Market Lead for CHRO Elevate.

“Corporate governance standards may be less developed, leading to potential issues with transparency and minority shareholder rights. However, as these countries integrate more with the global economy, there's an increasing trend towards better corporate governance and greater emphasis on shareholder value.”

When it comes to shareholder value, Craig Bouchard wrote the book – literally. His New York Times bestseller ‘The Caterpillar Way. Lessons in Leadership, Growth and Shareholder Valuemay have been written a decade ago, but “shareholder value will always be considered relevant, especially in our highly competitive investment arena,” the Founder and Executive Chairman of Ecolution kWh tells Business Chief.

“Exceeding shareholder expectations is the single most important performance indicator to attracting and retaining professional investors.”

Spitzer adds that while shareholder value remains core, CEOs must balance it with other stakeholders' interests, including employees, customers, and the broader society.

“CEOs and boards are redefining shareholder value to include social and environmental; not as separate concerns because there is no long-term shareholder value without caring about employees, customers, communities, and other stakeholders expect and need,” adds Spitzer.

Dubai-based Phillip Lord has 25 years of financial markets experience and is currently President of crypto payments platform Oobit. He has a more pragmatic approach to shareholder value.

“It’s always relevant, but when markets and stocks go down, shareholders have more impact with the management on their advice and demands,” he says.

“We have gone from ‘growth company mode’ to ‘profit company mode’. Companies need to focus on generating revenues, not just spending it for growth.”

Lord argues that geography does not matter, and that “everyone should be focused on building a great business” and says CEOs should “embrace AI, cut costs, grow the company, and generate sustainable profits”.

Bouchard says companies are adopting a more balanced approach, seeking to create value for all stakeholders rather than prioritising shareholders. While he says that shareholder value should absolutely still be the main focus for CEOs, he believes that most leaders are getting it wrong, and that there should be a greater focus on allocating capital correctly.

“Even in the Fortune 500, I give a grade of C to over half of the CEOs I’ve observed or studied,” declares Bouchard. 

How CEOs can deliver shareholder value

There are lots of financial, strategic, operational, governance and transformational levers COEs can use. As a human capital strategist, Spitzer says CEO skills are crucial. She says the non-technical shareholder value capabilities CEOs require are:

  • 360-degree view of strategy that includes both the normal stuff (value drivers, markets, customers, competitors, products and services, financials, and risk) and the new stuff (human capital, environmental, societal, and governance)
  • Purpose-informed capital allocation and financial planning viewed that considers the impact investment decisions have on people and the planet, alongside profit
  • Ethical integrity and the ability to establish trust and credibility by exhibiting high standards and responsible leadership
  • Stakeholder engagement with a keen ability to listen, empathise, communicate, build relationships, and understand diverse perspectives
  • Adaptive leadership to navigate change, embrace innovation, drive transformation, and guide teams through uncertainty; being open to new ideas, willing to challenge the status quo, and capable of making tough decisions
  • Understanding the ROI of diversity and inclusion and promoting a culture that values and respects differences
  • Continuous learning to stay on top of industry trends, regulatory changes, and best practices

“In addition, CEOs need fluency in cybersecurity, artificial intelligence, digital transformation, human capital management, and environmental, social, and governance (ESG), which present significant competitive, reputational, and financial threats,” adds Spitzer.

The reasons for continuing to pursue shareholder value are clear, but leaders also need to marry this with responsible business practices, otherwise they risk losing out to more agile and enlightened organisations.

“I truly believe we are witnessing the force of business used for positive change in the world,” says Spitzer.

 “I believe that corporations are, and can be, drivers of the systemic change needed to not only create commerce, support capitalism, and build wealth, but to also make the world a more just, safe, healthy, and welcoming place.”

Craig Bouchard


Craig Bouchard, Founder and Executive Chairman, Ecolution kWh

Ecolution technology converts kinetic energy in moving vehicles into an electric microgrid. Craig is the New York Times bestselling author of The Caterpillar Way. Lessons in Leadership, Growth and Shareholder Value’. He founded three companies that achieved roughly US$1 billion of revenue within 18 months. His companies completed 12 acquisitions of metals companies and he has won three hostile proxy contests. Craig was a finalist for the prestigious Platts S&P CEO of the Year award in the global metals industries in 2018.

Barbara Spitzer, Northeast Market Lead at Accenture

Barbara works with Boards of Directors and CEOs to maximise profitability and innovation. She drives growth, revenue, market share, and shareholder value optimising digitisation, sustainability, human capital management, and DEI. She has broad industry experience delivering stakeholder value, and driving business strategy execution, and financial performance.

Phillip Lord, President of Oobit

Dubai-based Phillip has 25 years of experience in global capital markets, deep relationships with major Sovereign Wealth Funds, private equity, venture capital and hedge funds. He is experienced in dealing with entrepreneurs, understands funding capital, investor relationships, and exit needs, and is an expert in crypto markets.


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