The IPO activity in the Mena region is expected to remain firm in 2014, building on a strong momentum from the last quarter of 2013, which closed with a total of seven deals raising around $726.2 million, said a report.

The EY Mena IPO Update: Q4 2013 pointed out that better market fundamentals are expected to support a solid start to 2014 for new offerings.

Phil Gandier, Mena transaction advisory services leader, EY, said: “The Mena IPO market is rebounding and recovering. The improving macro-economic backdrop driving up stock market valuations and rising investor confidence in key markets saw the IPO year end on a high. Q4 has seen an increase in both volume and value compared to 2012, registering the highest value of IPOs since 2008.”

“Additionally, in our Capital Confidence Barometer report, 73 per cent of executives in Mena see the local economy improving, with the highest percentage of confidence being in indicators such as economic growth, employment growth and credit availability. The confidence in these indicators bodes well for the region as economic growth and credit availability are key drivers for the IPO market,” he said.

In Q4 2013, seven IPOs in Mena recorded a 133 per cent increase in terms of volume and 114 per cent in terms of value compared to the same period in 2012.

The largest IPO was from UAE with Damac Real Estate Development, which was listed on the London stock exchange and raised $348 million in a global depository receipt (GDR) offering. Two other IPOs from the UAE were also in the UK, with two in Oman and one each in Saudi Arabia, Morocco and Tunisia.

“Although IPOs have still not reached pre-financial crisis levels, there has been a notable improvement in performance. The stage is set for this momentum to continue across the region and we expect the strong performance in the US and Europe to reflect in Mena,” said Gandier.

In 2013, 23 Mena IPOs raised $3 billion, a 64 per cent increase in terms of volume and 51 per cent increase in terms of value compared to 2012, he said.

“Family businesses are increasingly looking at IPOs as a means of monetising wealth, raising capital and institutionalising the business and the MCSI upgrading of Qatar and UAE to emerging markets may help to boost interest in the region,” Gandier added.

Financial services was the leading sector by deal volume with seven IPOs, followed by three in the power and utilities sector and two each in transport  and the real estate sector

“Some issuers have decided to go outside of Mena and it will be interesting to see how this trend of issuers going overseas will develop in the coming year. There is a strong pipeline of good quality businesses preparing to IPO over the next nine months. It usually takes companies 12 to 18 months to get ready to float and there is plenty of preparatory work under way,” said Gandier.

“If the macroeconomic conditions in the region continue to improve, the next 18 months to two years will be quite busy,” he concluded. - TradeArabia News Service