New EY research says many companies across the Middle East have chosen to delay their plans for initial public offerings
The MENA region raised $2.9 billion through 26 IPOs during 2018, significantly down on the previous year, according to the latest EY MENA IPO Eye report.
Compared to 2017, IPO value saw a decrease year-on-year by 24.6 percent while activity declined by 23.5 percent.
Phil Gandier, MENA transactions leader, EY, said: “IPO activity in the MENA region saw a decline in 2018 as several entities across the region deferred their plans for IPOs.
"This can be attributed to various reasons including challenging economic conditions affecting regional businesses and global trade concerns. Regulatory changes and a rising interest rate environment over the past year have also contributed to decreased activity.
"However, despite the slowdown, 26 IPOs were recorded in the region across sectors over the past year, indicating an appetite for more diversified activity.”
In the GCC, 18 deals were recorded in 2018 with a total value of $2.5 billion with Saudi Arabia leading IPO activity in 2018 with 12 IPOs worth $1.5 billion.
In the fourth quarter of 2018, the MENA region witnessed seven IPOs, of which one was a REIT listing, for a total deal value of just over $1 billion.
Gandier added: “While the interest from several companies across the MENA region to execute an IPO is high, especially for those looking to access international investors and exchanges, many plans have been delayed for numerous reasons, including underperformance of businesses due to the challenging economic environment, global market volatility, and the time it takes to adapt to public company listing requirements.
"We continue to work with many companies in preparation for transactions in 2019 and beyond, particularly from the United Arab Emirates, Saudi Arabia, and Egypt.”
Globally, IPO activity continued to slowdown in Q4, with 326 IPOs raising $53.7 billion, marking a decrease of 34 percent and 10 percent respectively, compared to Q4 2017.