IPO activity dropped 33% compared to 2019 but value rose 21.9% year-on-year
A total of four IPOs in the MENA region have raised $349.9 million during Q3 2018, according to the latest EY MENA IPO Eye report.
While IPO activity dropped 33.3% compared to the same period last year, partly due to fluctuating oil prices and headwinds in the economy, the value rose 21.9% year-on-year.
“It is positive to see that IPO value increased year-on-year in Q3, especially when we’ve seen several entities across MENA delaying their plans for IPOs in 2018 due to various factors including (but not limited to) regulatory and global trade concerns and uncertain market conditions in a rising interest rate environment.” said Phil Gandier, MENA Transactions Leader, EY.
Saudi Arabia led the regional activity with the IPO of Leejam Sports Company on the Saudi Stock Exchange. IT raised $220.6m, making it the biggest IPO in the third quarter. In the previous quarter, four companies went public, three of which were REIT listings on Tadawul.
Moreover, Oman’s Muscat Securities Market (MSM) saw one IPO listing for Dhofar Generating Company in the power and utilities sector. It raised $52m.
Despite a slower performance in the GCC IPO market this year, regulatory updates and inclusions in global indices have been positive, according to Gregory Hughes, MENA IPO Leader, EY, referring the FTSE Russell’s plans to include Tadawul as a secondary emerging market index in 2019.
He also mentioned MSCI’s agreement with Tadawul to jointly launch a tradable index in Q4 2018. It is intended to function as a platform for investment instruments, covering exchange-traded fund (ETFs).
Hughes also said Oman’s IPO pipeline looks healthy due to increased clarity in regulatory processes in the power and water sectors, creating transparent competition. The country will see as many as six power generation and water desalination companies planning to go public in the next three years.
Furthermore, the Abu Dhabi Securities Exchange intends to roll out futures trading next year in a bid to boost investments, with the stock exchange connecting with seven companies looking to go public.
MSCI is also reportedly reclassifying the Kuwait Stock Exchange as an emerging market in 2019.