Only the EMEA region showed growth in domestic initial public offerings (IPOs) during 2015, while cross-border deals worldwide slid back to just below 2013 levels, according to a Cross-Border IPO Index by global law firm Baker & McKenzie.

The Index reveals that domestic and cross-border IPO activity across the world both fell this year, with potential issuers facing poor market performance, geopolitical uncertainty, low commodity prices and interest rate rises on the horizon. Trade sales often provided more certain and often higher valuations than an IPO, to the detriment of the equity capital markets.

Cross-border IPO activity

Overall, cross-border IPOs raised $37.8 billion worldwide from January 1, 2015 to December 10, 2015, down 53 per cent from last year. Though to put that in context, cross-border deal values rose 98 per cent in 2014 and 73 per cent in 2013. Cross-border volumes declined 32 per cent to 128 deals after a 26 per cent gain in 2014 and 58 per cent increase in 2013.

After a year of inactivity, there was only one cross-border listing by a UAE issuer - the IPO of Orascom Construction, which debuted on the Egypt Stock Exchange and raise $185.01 million. Cross-border IPO activity by Saudi Arabian issuers remained in active for this year.

The year 2015 saw the first cross-border IPOs by Egyptian issuers in the last five years. The two listings raised $558.14 million and were among the most notable cross-border IPOs across the EMEA region. The $334 million IPO of Integrated Diagnostics Holding and the $264 million IPO of Edita Food Industries SAE were dual listed on the Egypt and London Stock Exchanges.

Notably, just three exchanges accounted for 93 per cent of all cross-border IPOs in 2015 - the Hong Kong Stock Exchange, Nasdaq and the London Stock Exchange - with companies seeking to raise capital in deeper, better capitalized markets.

Nine of the 10 largest global cross-border deals were Chinese companies listing on the Hong Kong Stock Exchange. Globally, 2015 saw increased cross-border IPOs in the telecommunications, healthcare, financials and industrials sectors.
 
Domestic IPO activity

Domestic issuance fell 25 per cent globally in 2015, but off the back of a rise of just 2 per cent in 2014. Domestic volumes also fell, by 17 per cent. However, domestic listings grew 7 per cent by value in EMEA, the only region that showed growth in domestic deals.  

There were no domestic listings in the UAE this year, in contrast to last year's five listings that raised $2.91 billion. Similarly, domestic IPOs in Saudi Arabia declined this year, with capital raised dropping 84 per cent (from $6.4 billion in 2014 to $1 billion in 2015), while volume fell from five listings to three this year.

Egypt, on the other hand, tripled its domestic IPO activity with $360.3 million raised from three listings in 2015, in contrast with one IPO valued at $108.7 million in 2014.  

"It has been a challenging year, with high volatility, low commodity prices and macro uncertainty likely to continue to have an impact on the markets in 2016 before cross-border offerings pick up again," said Karim Nassar, head of Capital Markets at Baker & McKenzie's associated firm in Riyadh, Saudi Arabia.

“Next quarter' was the theme of 2015 as IPOs kept being pushed back throughout the year, and banks across the Middle East are bracing for more challenges in 2016,” said Mazen Boustany, head of Banking & Finance at Baker & McKenzie Habib Al Mulla, based in Dubai, UAE.

"With diversification accelerating across the GCC in an effort to reduce the impact of oil price volatility, and with new commercial and financial regulations being implemented in the region, there is hope for future cross-border capital flows." – TradeArabia News Service