Saudi Arabia leads MENA IPO activity in H1, says E&Y

Saudi Arabia led initial public offering (IPO) activity in the Middle East and North Africa (MENA) region in H1 2017, with nine listings worth a total of $200.5 million on the Nomu Parallel Market, Ernst & Young said in a recent report.

In the GCC, 13 IPOs were launched in the first half of the year, a 33 percent increase when compared to the same period last year. The value of offerings, however, declined by 6 percent YoY to $700 million.

Meanwhile, MENA IPOs doubled year-on-year (YoY) to 16 deals in H1 2017 – the most active first half by number of IPOs since H1 2007.

Capital markets in the region raised $788 million in the first half, a drop of 21 percent YoY, the report said.

The oil and gas sector raised the highest capital in H1 2017 with the listing of Egyptian oil and gas driller ADES International Holding Ltd, which raised $243.5 million from its IPO on the London Stock Exchange. The listing was the largest by a MENA company year-to-date.

The construction sector came second with one deal valued at $135 million. The third offering was in the real estate investment trust (REIT) at $105 million for one deal.

“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 MENA, with a strong backlog of companies potentially preparing to come to market,” said Gregory Hughes, EY MENA IPO Leader.

“The key driver for the MENA IPO market will likely be the privatization of leading government-owned assets across a number of sectors,” he added.

Privatization is increasingly gaining traction in the oil-rich region as governments grapple with the impact of low crude prices.

Saudi Arabia expects to raise about $200 billion in coming years from privatizing government entities in various sectors including healthcare and airports Reuters reported in April, citing Mohammed Al Tuwaijri, the deputy minister of economy.

The country aims to fully or partially privatize enterprises in 16 sectors by 2020, the minister added.

Among the most anticipated privatizations in the region is the sale of a 5 percent stake in oil giant Saudi Aramco next year. The listing, which will take place on the domestic stock exchange as well as a yet-to-be decided international bourse, is expected to raise $100 billion.