Wednesday 27 / November / 2024
Muscat: In 2018, the Middle East and North Africa (Mena) region raised US$2.95 billion through 26 Initial Public Offerings (IPOs), according to the latest EY MENA IPO Eye report. Compared to 2017, IPO value saw a decrease year-on-year by 24.6 per cent and activity declined by 23.5 per cent.
“IPO activity in the MENA region saw a decline in 2018 as several entities across the region deferred their plans for IPOs. This can be attributed to various reasons, including challenging economic conditions affecting regional businesses and global trade concerns," Phil Gandier, MENA Transactions Leader, EY, said.
"Regulatory changes and a rising interest rate environment over the past year have also contributed to the decreased activity. However, despite the slowdown, 26 IPOs were recorded in the region across sectors over the past year, indicating an appetite for more diversified activity,” he added.
IPO performance
In the GCC, 18 deals were recorded in 2018 with a total value of $2,564.6 million. Saudi Arabia led the IPO activity in 2018 with 12 IPOs worth $1,472.4 million.
In the fourth quarter of 2018, the MENA region witnessed seven IPOs, of which one was a real estate investment trust (REIT) listing, for a total deal value of $1,085.1 million.
Saudi Arabia witnessed two IPOs in the fourth quarter of 2018, including Alkhabeer REIT, which raised $64.1 million and the National Company for Learning & Education, which raised $66.7 million. Tadawul is working on several initiatives including launching stock index futures (planned for the first quarter of 2019) and launching a special incentive programme for local companies to list.
The country is also planning the privatisation of more than 20 companies in 2019 in sectors such as water, agriculture, energy, and sports. To help increase transparency, the government plans to retain minority interests in the businesses and undertake IPOs and other transactions for a certain percentage of each asset.
Bahrain IPO
The Bahrain Stock Exchange saw the IPO of port operator APM Terminals in the fourth quarter of 2018 raise $32 million. The IPO was oversubscribed by 5.4 times, making it the most successful IPO in Bahrain in over a decade.
Nasdaq Dubai plans to launch futures trading on the MSCI United Arab Emirates equity index in 2019 to provide investors a new avenue to gain exposure to UAE companies.
In Kuwait, S&P has issued a statement that the country will be added to the S&P Dow Jones Global Benchmark Indices with an emerging market classification in 2019. The Kuwait Stock Exchange is currently awaiting MSCI’s decision in 2019 on upgrading the exchange to emerging market status from the current frontier market status.
“While the interest from several companies across the MENA region to execute an IPO is high, especially for those looking to access international investors and exchanges, many plans have been delayed for numerous reasons, including underperformance of businesses due to the challenging economic environment, global market volatility, and the time it takes to adapt to public company listing requirements," Gregory Hughes, MENA IPO Leader, EY, said.
"We continue to work with many companies in preparation for transactions in 2019 and beyond, particularly from the United Arab Emirates, Saudi Arabia, and Egypt,” he added.
