Nine IPOs raise $881.5mn in second quarter

Business Tuesday 28/August/2018 15:31 PM
By: Times News Service
Nine IPOs raise $881.5mn in second quarter

Muscat: The Middle East and North Arica (Mena) region raised US$881.50 million through nine initial public offerings (IPOs), (including four Real Estate Investment Trust (REIT) listings), in second quarter of 2018, according to the latest EY MENA IPO Eye report.
Compared to second quarter 2017, both IPO value and activity increased year-on-year by 42.8 per cent and 12.5 per cent respectively. Out of the nine deals in MENA, seven IPOs were recorded in the Gulf Cooperation Council (GCC) (including three REIT listings) raising US$780.30 million.
Saudi Arabia leads IPO
Saudi Arabia led the MENA IPO activity recording four out of nine IPOs in the second quarter of 2018, part of an increasing trend of REITs being listed on the exchange and a reflection of the underlining investor interest in real estate assets in the country.
The highest value IPO in the quarter was the Mefic REIT Fund IPO, listed on the Saudi Stock Exchange, which raised US$237.50 million.
“The future inclusion of Saudi Arabia in the MSCI emerging markets index has drawn positive attention to the country, attracting investors from across the world. The country’s Capital Market Authority has brought in a mandatory corporate governance code, considerably relaxed rules for foreign investors, and raised settlement rules for the domestic Tadawul stock market toward global standards, which have all led to a favourable transacting environment,” Phil Gandier, MENA Transactions Leader, Ernst & Young (EY), said.
The Muscat Securities Market (MSM) recorded a single IPO in the second quarter of 2018 raising US$12.80 million. Looking to the future, the MSM has an IPO pipeline of over 10 companies that are expected to complete their listings in the next two to three years.
In the wider MENA region, Egypt and Morocco recorded one deal each. Egypt in particular is seeing an increasing number of both government-owned and private companies looking to tap the equity markets through IPO. The Egyptian government’s IPO programme intends to list 23 public sector companies on the EGX, which is also in line with the 2018-2019 proposed budget aims of the government.
The real estate sector raised the highest capital, with four REITs raising US$553 million, followed by US$225 million raised in the oil and gas sector and US$57.20 million in financial services.
“Although oil prices have increased, MENA countries are still feeling the impact of the significant drop in oil prices in recent years. IPO activity was relatively slow in H1 2018, but activity is expected to pick up in second half (H2) 2018 and beyond owing to the strong upcoming IPO pipeline,” Gregory Hughes, MENA IPO Leader, EY, said.
Globally, IPO activity and proceeds dipped in second quarter of 2018, with 325 IPOs raising US$45 billion, a decrease of 26 per cent and 19 per cent respectively, in comparison with the second quarter of 2017.
“Reasonably strong equity markets, solid corporate earnings in many jurisdictions (albeit with some exceptions), and healthy pipelines across sectors and markets globally should drive an increase in listings in H2 2018 and beyond. However, there is still significant uncertainty in several parts of Europedue to currency fluctuations in emerging markets and the ongoing tariff discussions globally driven by the USA,” Gregory added.