Mena markets buck global IPO downturn

Reuters

• Region saw 288% increase in number of companies listing
• Saudi and UAE majority of listing, then Kuwait, Oman and Qatar
• Global decrease as investors face challenges and falling equity prices

The Middle East and North Africa (Mena’s) IPO market continued to “forge its own path” during the first nine months of 2022, showing significant growth while the global landscape remained subdued.

According to the latest EY Mena IPO Eye report, the Mena region witnessed a 288 percent year-on-year increase in the number of companies listing between January and September, raising $14.7 billion in total – up 550 percent on the same period last year.

Experts said they expect this regional growth to continue, with increased activity in dual listings to tap varied liquidity pools.

• Empower targets Gulf expansion with IPO cash boost
• Saudi Aramco’s trading unit said to list on Tadawul by early 2023
• Egypt aims to double private sector to tackle economic woes

The strong run across the region’s markets included seven IPOs in Q3, raising approximately $1.5bn, bringing the total number of Mena IPOs in the year-to-date to 31.

Globally, there have been a total of 992 IPOs, raising $146bn, a 44 percent and 57 percent decrease year-on-year respectively, as companies and investors continue to face mounting macroeconomic challenges, market uncertainties, increasing volatility and falling global equity prices.

Brad Watson, EY Mena strategy and transactions leader, said: “Despite IPO volumes and values declining significantly in the majority of other global markets, the Mena region continues to forge its own path with a steady stream of new listings in Q3 adding to the large number of IPOs already announced across exchanges in the year-to-date. 

“While Saudi Arabia and the UAE make up the majority of new listings, we are also seeing increased signs of future activity in some of the smaller markets of the region – particularly Kuwait, Oman and Qatar.”

In the UAE Dubai’s toll gate operator Salik Company raised more than $1bn, becoming the largest Mena IPO during Q3 and the fourth largest in the region so far in 2022. The IPO was oversubscribed more than 49 times across all tranches, with total gross demand at $50.2bn.

In announcing Dubai’s IPO programme last November, deputy ruler Sheikh Maktoum Mohammed bin Rashid Al Maktoum said that 10 state-linked firms would list on the Dubai Financial Market. 

These flotations would be part of efforts to lift the bourse’s market capitalisation to $817bn, he said.

Earlier this week, Dubai’s Emirates Central Cooling Systems Corporation, better known as Empower, was the latest to announce plans to launch its initial public offering, with a listing on the Dubai Financial Market scheduled on November 16.

Subscriptions will open on October 31 and close on November 7. Final pricing will be set on November 9, with Empower saying it will use proceeds to expand into other Gulf and Middle East markets. 

IPO activity also returned to Morocco for the first time since last year, with Disty Technologies, a Moroccan IT company, raising approximately $17 million on the Casablanca Stock Exchange.

Saudi Arabia dominated listings activity in Q3 with two IPOs on Tadawul’s Main Market and three IPOs on the Nomu-Parallel Market, raising $490m in proceeds. 

Alamar Foods Company’s public offering was the largest, with $326m raised and the IPO order book being oversubscribed approximately 48 times. Naqi Water Company raised $110m and was oversubscribed over 30 times. 

Gregory Hughes, EY Mena IPO and transaction diligence leader, said: “This has been another strong year for IPOs and trading activity throughout the MENA region, with investor confidence remaining high despite challenging financial headwinds across the world. 

“As we look into Q4, we see no signs of that changing, with several prominent companies in the region having completed their IPOs.

“We are also expecting increased activity in dual listings to tap varied liquidity pools; and continued government divestment processes in the UAE, Oman and other countries, as well as movement from family businesses, which are believed to be planning market entry in different parts of the region.”