Mena IPOs raise $788m in first six months
DUBAI, September 27, 2017
Activity in initial public offerings (IPOs) across the Middle East and North Africa (Mena) region witnessed a 100 per cent increase in the first half registering 16 deals, thanks to the stable fuel prices and confidence boost in global economy, said a report.
The first half of 2017 was the most active H1 of the year by number of IPOs since 2007, according to the report by global professional services firm EY.
However the capital raised through the IPOs plunged 21 per cent to $788 million in the first six months over the previous year, it added.
According to EY, out of the 16 IPOs, nine of them worth a total $200.5 million were from companies listed on the Saudi Nomu market.
The cross-border IPO of Ades International Holding raised $243.5 million on the London Stock Exchange and was the largest IPO of a Mena company, by capital raised, year-to-date, it added.
Gregory Hughes, the Mena IPO leader at EY, said: "Increasing stability in oil prices and confidence in the global economy and markets are likely to drive an increased IPO activity in 2017 and 2018 across the region, with a strong backlog of companies potentially preparing to come to market."
The key driver for the Mena IPO market will likely be the privatization of leading government-owned assets across a number of sectors, he noted.
The greenfield IPO of Orient UNB Takaful PJSC (Orient UNB) in Q2 of 2017 represents the first IPO on the Dubai Financial Market (DFM) since the IPO of Dubai Parks and Resorts in 2014.
According to EY, the GCC saw 13 IPOs raised in the first half, a 33 per cent increase on the deals announced for the same period last year. However, deal value declined by six per cent to $700 million in H1 when compared to H1 2016.
The highest capital raised in the six months was in the oil and gas sector with one deal announced at a value of $243.5 million. The construction industry followed with one deal valued at $135 million.
The third most valuable IPO by capital raised was in the real estate investment trust (REIT) at $105 million for one deal, said the EY report.
In the first half of 2017, oil prices continued to fluctuate between $45 and $55 per barrel as the initial effect of agreed oil production cuts by Opec and non-Opec members continue to be impacted by ongoing market factors, resulting in a downward trend toward the end of Q2 2017.
However, the continued drive for privatization across Mena countries is likely to result in an increase in the number of IPOs on exchanges, it added.
Mayur Pau, the Mena financial services IPO leader at EY, said: "Global IPO activity should continue to strengthen in the second half of 2017, underpinned by capital markets reaching all-time highs."
"Investor sentiment has improved and the global outlook is more positive, which should reflect on the IPO market in the region," he added.-TradeArabia News Service
