The listing activity in the Middle East and North Africa region continued to gather momentum in the second quarter of this year, as the volume of initial public offerings on regional bourses climbed by 44 per cent annually amid robust economic growth.
The number of IPO transactions rose to 13 during the three-month period to the end of the June, bucking the global slowdown in equity capital markets activity. However, proceeds from Mena listings dropped by 80 per cent to $1.8 billion, according to EY data.
“The second quarter of 2023 confirmed that Mena IPOs are not experiencing the downward trend witnessed globally,” Brad Watson, EY Mena strategy and transactions leader, said.
“The UAE and Saudi Arabia continue to be the most active markets in the Mena region in terms of both the number and size of IPOs.”
The Mena region has strong economies with low debt levels and that, coupled with the reform and deregulation taking place in the region, makes it an attractive destination for listings, Mr Watson added.
Saudi Exchange, the biggest by market cap in the Middle East, led the volume growth, with four listings on the main market that raised $800 million and seven IPOs on its parallel Nomu market securing $100 million in total proceeds.
Jamjoom Pharmaceuticals was the biggest IPO deal in the kingdom during the second quarter, raising $336 million, followed by First Milling Company, raising $266.4 million. Both Saudi companies offered 30 per cent of their share capital to public in deals that were oversubscribed, according to EY data.
In the UAE, the Abu Dhabi Securities Exchange hosted the largest Mena IPO of the quarter, with Adnoc L&S raising $769.5 million.
“The IPO saw the largest demand globally for a transaction so far in 2023, with an oversubscription level of 163 times in aggregate – the highest oversubscription for a UAE book-build IPO,” EY said.
The IPO of Al Ansari Financial Services was the other major listing in the UAE. The money exchange became the first family-owned business to list in the UAE, when it raised $210.4 million through its public float on the Dubai Financial Market.
Most Mena economies, especially those in the six-member economic bloc of the GCC have bounced back strongly from the pandemic-driven slowdown.
The economic recovery momentum, coupled with higher oil prices, also drove IPO activity in the wider GCC region, especially in the UAE and Saudi Arabia.
Overall, 12 companies in the UAE alone listed last year, raising $11 billion, in addition to the joint Abu Dhabi-Riyadh listing of Mena food franchisee Americana, which reaped $1.8 billion.
The listing of Dubai Electricity and Water (Dewa) was the largest GCC IPO in 2022, raising $6.1 billion.
Borouge, the joint venture between Adnoc and Austrian chemicals producer Borealis; Abu Dhabi Ports Group and healthcare provider Burjeel Holdings were among those that listed shares on the ADX.
Overall, Middle East IPOs raised more than $23 billion in 2022, the highest aggregate value for the region after 2019, when Saudi Aramco went public in a $29 billion offering.
In the first half of this year, the number of Mena IPO deals reached 23, a 4 per cent year-on-year slide, all of which were in the GCC with total proceeds of $5.2 billion.
While IPO value is contracting in the broader Europe, Middle East, India and Africa region, Mena has a promising pipeline for the rest of the year, particularly in Saudi Arabia, EY said.
So far, 23 Saudi companies have announced listing plans on the Tadawul for the second half of this year. Two companies in Egypt intend to list, as the country prepares to privatise state-owned enterprises, the report said.
The listing of 11 companies on the UAE capital markets this year will raise more than Dh8 billion ($2.18 billion), Mohamed Al Hadari, deputy chief executive of the Securities and Commodities Authority said in January.
Four free-zone entities and two special purpose acquisition companies (Spacs) are in the listing pipeline in 2023, he said at the time.
“The Mena IPO pipeline for second half of 2023 and 2024 remains very healthy with several IPOs already announced in Saudi Arabia and multiple processes continuing across the broader region, with further transactions planned in the UAE, Oman, Qatar and Kuwait,” Gregory Hughes, EY’s Mena IPO and transaction diligence leader, said.
“We see planned IPO activity across different sectors and from a combination of family business, state-backed enterprise and private equity stakeholders.”