Dubai / Emirates Business
In the fourth quarter of 2017, MENA IPO activity witnessed eight deals, representing a 60% surge in volume over the same period in 2016. The MENA IPO value, or capital raised, amounted to $2.5 billion in Q4 2017, over ten times the capital raised last year and the highest since 2014.
The UAE led the MENA IPO market in value, having raised a cumulative of $2.2 billion in capital, primarily contributed by the Emaar Development IPO ($1.3 billion), which was the biggest IPO in the region since 2014. The UAE also saw another successful issuance in the form of Adnoc IPO which raised a capital amounting to $850.9 million.
In Oman, the Muscat Securities Market recorded the highest number of listings with three IPO deals during Q4 2017, raising a combined capital of $81.9 million.
The MENA IPO activity is expected to gain momentum in 2018 bolstered by economic reforms and privatisation drive of countries such as Saudi Arabia and Egypt. This, coupled with improved oil prices, favourable government initiatives and strong investor appetite, is likely to spur more listings in the MENA, especially from leading regional government-entities.
Gregory Hughes, MENA IPO Leader, EY says, “The IPO activity is poised for further growth in 2018, especially with government and quasi-government owned assets preparing to go public in Kuwait, Egypt, KSA and the UAE. The IPO activity in the region is likely to see a mix of local and international floatings. In addition, family owned, owner managed, and private equity-backed businesses are also signalling their intention to go to the market during 2018; this again could include a combination of local and international offerings of different sizes.”
The IPO market in Saudi looks buoyant with major regulatory reforms underway, and the impending public listing of Saudi Aramco, Saudi Exchange, and other large government-related entities. Tadawul is also on its course to join MSCI’s emerging market index and has been swift in improving the regulatory environment and allowing foreign investments to be in line with global standards.
In the last quarter of 2017, Tadawul raised an announced value of $110 million, while Saudi’s parallel market, NOMU, saw a decrease by 48% in 2017 with no IPOs in Q3 2017 or Q4 2017. However, effective from 1 January 2018, the Saudi Capital Market Authority (CMA) has allowed direct investments by non-resident foreign investors on NOMU.
Mayur Pau, MENA Financial Services IPO Leader, EY, says, “The CMA’s recent updates could encourage more small and mid-cap companies to go public in 2018, leading to a rebound in IPO listings on NOMU alone. The IPO activity pipeline for the UAE, Kuwait, and Egypt also looks promising with major government-owned firms announcing their plans to go public within the next two years.”