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Mena IPO pipeline ‘healthy’ after fall in Q1 listings

Saudi stock market Tadawul Reuters/Faisal Al Nasser
Over 67 billion shares were traded on Saudi's Tadawil between January and September 2023
  • Listings down by a third and 14% in value compared to Q1 2022
  • 10 Mena stock market listings in Q1 this year raised $3.4bn
  • Energy sector expected to lead IPO activity for rest of year

A “healthy pipeline” of initial public offerings lies ahead for the remainder of this year, experts have told AGBI, despite a fall in Middle East and North African listings in the first quarter.

According to the EY Mena IPO Eye Q1 2023 report, the quarter saw 10 stock market listings with combined proceeds of $3.4 billion. This was a third fewer and down 14 percent in value compared to Q1 2022.

However, the region still provided 16 percent of total global proceeds of flotations in Q1. Analysts say the pipeline for the rest of the year will be driven by initiatives such as the Abu Dhabi IPO Fund. 

Earlier on Wednesday Abu Dhabi National Oil Company (Adnoc) said it will float a 15 percent minority stake in its maritime logistics subsidiary later this month.

Six companies in Saudi Arabia have also announced their listing plans on its Tadawul exchange.

At the end of the quarter, six out of the 10 Mena IPOs had a positive return compared to their listing price. This was despite continued volatility in equity markets due to rising interest rates, inflation concerns, global banking turbulence and geopolitical uncertainties.

Brad Watson, from EY, said: “Q1 proved Mena public offerings continue to go against global trends in these uncertain economic times, building on the momentum from last year.

“There’s a healthy pipeline across the region for the rest of the year, with several initiatives to support private and government entities on their path to listing.”

A total of 299 IPOs raised $21.5 billion around the world, a 61 percent decrease in volume year-on-year after a subdued 2022.

Saudi Arabia was the frontrunner in Mena activity, with six. Abu Dhabi’s Securities Exchange had the largest flotation of the quarter globally, with Adnoc Gas raising $2.5 billion. 

Gregory Hughes, also from EY, said that despite the decline in IPO deals, activity remained “robust”, led by the energy sector.

“Q2 is already off to a strong start with a number of announced regional listings,” he added, pointing to Al Ansari Exchange floating on the Dubai Financial Market in April, raising $200 million, and the imminent lising of Meeza, a technology services provider in Qatar.