The Middle East and North Africa (MENA) region saw 21 IPOs raise proceeds of $7.9 billion in 2021, according to new research.
Ernst and Young’s MENA IPO Eye Q4 2021 report said the region saw an annual increase of 133 percent in total issuances and 325 percent in total proceeds when compared to 2020.
The year’s biggest IPOs in value in MENA were in the utilities, energy and financial services sectors, with Saudi Arabia’s International Company for Water and Power Projects (ACWA Power Company) leading with proceeds of $1.2 billion on the Tadawul.
The Tadawul main market saw five IPOs in Q4 alone, with a further two on the Nomu-Parallel Market.
The region’s second largest IPO in value in 2021 was also in the energy sector, with the ADNOC Drilling Company securing proceeds of $1.1 billion in Q4 on the Abu Dhabi Securities Exchange (ADX).
EY said major market activity returned to the MENA region, with 13 issuances raising $5.6 billion in proceeds for the year.
Globally, 2021 was the most active year for the IPO market for over 20 years, with a total of 2,388 deals raising $453.3 billion in proceeds. Europe, the Middle East and Africa exchanges produced the highest growth seeing a 158 percent increase in the number of IPOs (724) and a 214 percent increase by proceeds ($109.4 billion).
Brad Watson, EY MENA strategy and transactions leader, said: “MENA IPOs had a record year in 2021, with an unprecedented surge in issuances, which was driven by a combination of supportive regional regulatory actions as well as a shift in investor sentiment back towards MENA markets.”
MENA equity markets had a stellar performance during 2021, with the observed markets all generating double-digit returns.
The top performer for 2021 was Abu Dhabi, with a return of 68 percent, followed by the Tadawul with its index up by 30 percent for the year.
Dubai Financial Market was up by 28 percent, followed by the Boursa Kuwait Premier Market Index, which grew by 26.2 percent. The Bahrain All Share Index increased by 21 percent while in Oman the MSX 30 Index returned 13 percent.
The report comes after Abu Dhabi launched a $1.3 billion IPO Fund to help encourage and support private companies to list on the local stock market.
The IPO fund will invest in 5-10 private companies a year, with a special focus on small and medium enterprises.
Towards the end of the year, Dubai announced the listing of 10 government and state-owned companies on the Dubai Financial Market (DFM) as part of accelerating new listings in various sectors, including energy, logistics and retail.
Dubai is further planning to encourage private and family-owned businesses to list on its stock market to bring back much-needed activity and liquidity.
Additionally, Dubai launched a AED1 billion ($272.3 million) Future District Fund to support technology companies and encourage them to list on the DFM.
Gregory Hughes, EY MENA IPO and transaction diligence leader, said: “While the extent to which the MENA region’s capital markets have rebounded is to be welcomed, the mid-to-long-term outlook remains somewhat uncertain, particularly in the context of rising interest rates, high inflation and global geopolitical tensions.
“However, when we consider that a great number of state-owned entities have announced their listing plans, and recent MENA listings have been so heavily oversubscribed, we are quite clearly moving through a period of high demand and strong investor sentiment.
“Key question remains as to whether there is sufficient liquidity in the regional markets to cover the expected pipeline of large government backed IPOs in the near term.”
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