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Summary: Positive sentiments for MENA IPOs as more regional energy companies expected to go public in 2018 and beyond

Driven by economic reforms and privatisation drives of countries such as Saudi Arabia and Egypt. IPO activity in the MENA region is expected to gain momentum this year. EY believes that 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.

IPO activity across the MENA region witnessed a 60 per cent surge in volume year-on-year in the fourth quarter of 2017. With eight deals concluded in that quarter, the capital raised amounted to $2.5 billion--over ten times the capital raised last year and the highest since 2014.

"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," said Gregory Hughes, MENA IPO Leader at EY.

The UAE led the MENA IPO market in value, raising a total of $2.2 billion in capital, primarily contributed by the Emaar Development IPO at $1.3 billion-- the largest IPO in the region since 2014. In addition to Emaar, the UAE also saw ADNOC going public, raising capital amounting to $850.9 million. On the other hand, Oman's Muscat Securities Market recorded the highest number of listings with three IPOs in the last quarter of 2017, raising a combined capital of $81.9 million.


Collectively, GCC markets witnessed six IPOs deals in the fourth quarter of 2017, recording a substantial volume increase of 200 per cent from the same period last year, while the deal value rose by over 10 times the capital raised in the previous year, reaching $2.4 billion in the final quarter last year. The real estate sector raised the highest capital with $1.3 billion, closely followed by the energy sector with $850.9 million. The REIT fund came third with a capital raised of $110 million.


According to EY, the global IPO market surged in 2017 with the listing of 1,624 deals, raising an aggregate capital of $188.8 billion. This was a significant growth trajectory in the number of deals listed up 49 per cent) and capital raised (up 40 per cent), in comparison to 2016. The uptick made 2017 the most active year for IPOs since 2007 with the global IPO market projected to grow even further this year.

This is seen to positively impact the regional IPO landscape. "With a large number of companies already gearing to go public in the next couple of years and that one of the world's largest IPO may come from the MENA itself, the outlook for regional IPO activity remains robust," asserts Gregory.



The IPO market in Saudi Arabia is buoyant with major regulatory reforms underway, and the impending public listing of Saudi Aramco, Saudi Exchange, and other large government-related entities.

In the last quarter of 2017, Tadawul raised an announced value of $110 million. However, its parallel market, NOMU, saw a decrease by 48 per cent in 2017 with no IPOs in the third or fourth quarter last year. Perhaps as a response to the lack of uptake, the Capital Market Authority (CMA)of Saudi Arabia has allowed direct investments by non-resident foreign investors on NOMU effective 1 January 2018.

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. The ADNOC IPO is one of the most successful regional issuances in recent times and it is likely to pave the way for more public listings from the MENA energy sector," said Mayur Pau, MENA Financial Services IPO Leader at EY.

Additionally, Tadawul is also on its course to join MSCI's emerging market index and has been expeditious in improving the regulatory environment and allowingforeigninvestmentstoalignwith global standards.

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Publication:Banker Middle East
Geographic Code:7EGYP
Date:Mar 28, 2018
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