Saudi Arabia raises $207 mln from IPOs in Q3: EY

Saudi Arabia topped the list of initial public offering (IPO) activity in the Middle East and North Africa (MENA) in the third quarter of 2017, raising $206.8 million from three deals, according to consultancy firm Ernst & Young.

The three IPOs on the Saudi Stock Exchange (Tadawul) included Musharaka REIT Fund, Zahrat Al Waha for, Trading and Al Maather REIT Fund, which raised $95.1 million $62 million and $49.7 million, respectively.

“Saudi Arabia continues to lead the way for IPO activity in the region, with an increasing trend of REITs being listed on the exchange underlining investor interest in real estate assets in the country,” said Mayur Pau, EY MENA Financial Services IPO Leader.

“Many private equity-backed and family groups continue to assess the IPO market and are working on readiness for attractive IPO opportunities. In particular, the UAE, Saudi Arabia, and Egypt have a strong pipeline of announced and rumoured IPOs, with a strong backlog of IPOs potentially preparing to come to market in the last quarter of 2017 and early 2018.”

Saudi Arabia opened its stock market to real estate investment traded funds (REITs) last year and had seen six REIT listings since. Two REIT funds were listed on Tadawul in Q3 2017, collectively raising $144.8 million.

Meanwhile, the Kingdom’s Nomu Parallel Market recorded no new listings during the third quarter. This comes after nine IPOs in H1 2017 following the launch of the exchange in February.

The Nomu index continued to decline during Q3 2017, falling 43 percent from its launch date to the end of September 2017.

Elsewhere in the GCC, the Muscat Securities Market recorded two IPOs after a gap of two years. The IPO of Al Ahlia Insurance Company raised $19.5 million, while the IPO of Vision Insurance raised US$ 10.4 million, the report said.

Overall, the MENA region saw five IPOs in Q3, representing a five-fold increase from the single IPO recorded in Q3 2016. The total capital raised was $236.7 million, a 20 percent increase year-on-year (YoY).

“The MENA IPO market outlook is positive against the backdrop of increasing stability in oil prices, improving investor confidence in the global markets and a strong desire to raise funds through privatization, resulting in a large pipeline of companies potentially preparing to come to market,” said Gregory Hughes, EY MENA IPO Leader.

“Based on the pipeline of IPOs, we expect to see a number of premium government or partially government-owned assets being floated over the next two years, particularly in the energy-related sector,” he added.

In terms of global IPO activity, the year 2017 is on course to be the busiest since 2007, with approximately 1,600 to 1,700 IPOs expected to raise between $190 billion and $200 billion, EY said.

The third quarter of 2017 saw 330 IPOs globally, with total proceeds of $37.6 billion, driven by ten deals valued at over $1 billion each.