Nine MENA IPOs raise US$881.5m in Q2 2018

27 August 2018

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  • Q2 MENA IPO value and volume increase 42.8% and 12.5% respectively compared to previous year
  • Seven deals, including three REITs, in the GCC raise US$780.3m in Q2 2018
  • The Muscat Securities Market (MSM) records single IPO in Q2 2018 raising US$12.8m
  • Saudi Arabia leads IPO activity in the region in Q2 2018
  • The IPO of Mefic REIT Fund on the Saudi Stock Exchange raising US$237.5m, was the biggest IPO in Q2 2018
  • Egypt and Morocco recorded one IPO each in Q2 2018

The MENA region raised US$881.5m through nine IPOs, (including four Real Estate Investment Trust (REIT) listings), in Q2 2018, according to the latest EY MENA IPO Eye report. Compared to Q2 2017, both IPO value and activity increase year-on-year by 42.8% and 12.5% respectively. Out of the nine deals in MENA, seven IPOs were recorded in the GCC (including three REIT listings) raising US$780.3m.

Saudi Arabia leads IPO and REIT activity in the region
Saudi Arabia led the MENA IPO activity recording four out of nine IPOs in Q2 2018, part of an increasing trend of REITs being listed on the exchange and a reflection of the underlining investor interest in real estate assets in the country.

The highest value IPO in the quarter was the Mefic REIT Fund IPO, listed on the Saudi Stock Exchange, which raised US$237.5m.

Phil Gandier, MENA Transactions Leader, EY, says:
“The future inclusion of Saudi Arabia in the MSCI emerging markets index has drawn positive attention to the country, attracting investors from across the world. The country’s Capital Market Authority has brought in a mandatory corporate governance code, considerably relaxed rules for foreign investors, and raised settlement rules for the domestic Tadawul stock market toward global standards, which have all led to a favorable transacting environment.”

Oman was the only other GCC country with IPO activity in Q2; the Muscat Securities Market (MSM) recorded a single IPO in Q2 2018 raising US$12.8m. Looking to the future, the MSM has an IPO pipeline of over 10 companies that are expected to complete their listings in the next two to three years.

In the wider MENA region, Egypt and Morocco recorded one deal each. Egypt in particular is seeing an increasing number of both government-owned and private companies looking to tap the equity markets through IPO. The Egyptian government’s IPO program intends to list 23 public sector companies on the EGX, which is also in line with the 2018-2019 proposed budget aims of the government.

The real estate sector raised the highest capital, with four REITs raising US$553.0m, followed by US$225.0m raised in the oil and gas sector and US$57.2m in financial services.

Gregory Hughes, MENA IPO Leader, EY says:
“Although oil prices have increased, MENA countries are still feeling the impact of the significant drop in oil prices in recent years. IPO activity was relatively slow in H1 2018, but activity is expected to pick up in H2 2018 and beyond owing to the strong upcoming IPO pipeline.”

Globally, IPO activity and proceeds dipped in Q2 2018, with 325 IPOs raising US$45.0b, a decrease of 26% and 19% respectively, in comparison with Q2 2017.

“Reasonably strong equity markets, solid corporate earnings in many jurisdictions (albeit with some exceptions), and healthy pipelines across sectors and markets globally should drive an increase in listings in H2 2018 and beyond. However, there is still significant uncertainty in several parts of Europe due to currency fluctuations in emerging markets and the ongoing tariff discussions globally driven by the USA,” comments Gregory.

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