Mena IPO activity gains pace in Q3 with five listings, EY says

Outlook is improving with more offerings expected next year

A Saudi investor monitors the stock exchange at the Saudi Stock Exchange, or Tadawul, on December 14, 2016  in the capital Riyadh. / AFP PHOTO / FAYEZ NURELDINE
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The Middle East and North Africa region recorded five IPOs in the third quarter of this year, up from a single listing in the same period last year and more offerings are expected thanks to the recovery in oil prices, consultancy EY said on Sunday.

The value of IPOs in the third quarter rose 20 per cent to US$236.7 million from a year-earlier period, led by 3 offerings on the Saudi Stock Exchange or Tadawul, EY said. “Many private equity-backed and family groups continue to assess the IPO market and are working on readiness for attractive IPO opportunities,” said Mayur Pau, EY MENA Financial Services IPO Leader,

“In particular, the UAE, Saudi Arabia, and Egypt have a strong pipeline of announced and rumored IPOs, with a strong backlog of IPOs potentially preparing to come to market in the last quarter of 2017 and early 2018.”


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The largest IPO in the third quarter was Saudi Arabia's Musharaka REIT Fund, which raised $95.1m, followed by Zahrat Al Waha for Trading, which raised $62m, and Al Maather REIT Fund, valued at $49.7m.

Oman’s Muscat Securities Market had two IPOs after a two-year drought: Al Ahlia Insurance Company which raised $19.5m and Vision Insurance which fetched $10.4m.

“The MENA IPO market outlook is positive against the backdrop of increasing stability in oil prices, improving investor confidence in the global markets and a strong desire to raise funds through privatization, resulting in a large pipeline of companies potentially preparing to come to market,” said Gregory Hughes, EY MENA IPO leader. “Based on the pipeline of IPOs, we expect to see a number of premium government or partially government owned assets being floated over the next two years, particularly in the energy-related sector.”

A greater number of real estate investment trusts are coming to the market in the Arabian Gulf. Saudi Arabia now has six Reits since it allowed the instruments to be traded in 2016.

“Saudi Arabia continues to lead the way for IPO activity in the region, with an increasing trend of REITs being listed on the exchange underlining investor interest in real estate assets in the country,” said Mr Pau.