Mena IPO deal value plunges 45pc in Q3
DUBAI, November 3, 2019
The deal value of initial public offerings (IPOs) in the Middle East and North Africa (Mena) region decreased by 45.3 per cent to $190 million in the third quarter, down from $347.3 million last year, according to a new report by leading professional services firm EY.
Global IPO exchange activity too was relatively slow during the period compared to Q3 last year with the total number of deals down by 24% and proceeds down by 22%, stated EY in its Mena IPO Eye Report.
The third quarter witnessed 256 IPOs raising $40.2 billion globally, with technology, healthcare and industrials topping the list in the number of IPOs issued.
Although global deal numbers are down, first-day returns on the main markets globally were broadly positive, stated the report.
Deals were recorded in Saudi Arabia and Egypt during the Q3, a decrease of 50% from the four deals listed in Q3 2018.
Matthew Benson, the Mena Transaction Advisory Services Leader, EY, said: "The global market as well as the Mena market witnessed a quieter third quarter in 2019 as far as IPOs were concerned."
Nevertheless, a backlog has grown during that time and as we enter the traditionally peak season, and IPO activity is expected to pick up in Q4 2019 and into 2020 as there hopefully becomes more clarity around global geo-political developments, including US-China-EU trade relations, Hong Kong, and Brexit," noted Benson.
Regionwise, Egypt dominated the market leading in IPO value with its listing of Fawry for Banking Technology and Electronic Payments, a company in the e-payments sector, raising $97 million in August.
The listing was oversubscribed by 30.3 times. The listing was the first IPO of a private company on the Egyptian Stock Exchange since Sarwa Capital in October 2018, said the report.
The current economic boost in Egypt has been hailed by investors since the country registered a growth of 5.6%, the highest economic growth since June 2010. Furthermore, inflation eased in August and reached its lowest rate since 2013.
Saudi Arabia, which came second on the IPO list, is encouraging family-owned companies to list on domestic market.
In July, Ataa Educational Company, one of Saudi Arabia’s biggest private school operators, raised $93 million with its listing - the fourth one in Riyadh this year.
Gregory Hughes, the Mena IPO leader, EY, said: "IPO listings in the Mena region may have slowed down during the third quarter compared to last year, but there remains a strong pipeline of companies finalising the details of their listing for a launch in the next twelve months both regionally and internationally."
The UAE's Securities and Commodities Authority is planning a host of measures to help boost investor confidence.
These include setting up a platform for unprofitable firms, mandating that at least one female member is on the board of listed companies, and requiring that all firms have a board of directors with the appropriate expertise, knowledge, and independence standards, said EY in its report.
In an effort to promote foreign investment in domestic companies, Oman is planning to implement a new regulation whereby there will be no upper capital limit for foreign investors. The regulation is expected to come into effect from January 2020, it stated.
In Kuwait, non-oil related activity has shown signs of recovery, due to expansionary government budget and accommodative monetary policy.
Credit growth was 5.2% in H1 2019 and has further been boosted by improvement in business lending, low inflation, and lower interest rates, it added.-TradeArabia News Service
