Four MENA IPO deals raise $814.2m in Q1 2020

The MENA region recorded an increase in IPO volume and value during the first quarter of 2020, with four IPOs raising $814.2m, the Ernst & Young’s MENA IPO Eye Report revealed.

This represents a 14-fold increase compared to the $57.6m raised from one IPO in the same period last year.

Global IPO exchange activity also gained momentum in Q1 2020, with 235 IPOs raising $28.5bn during Q1 2020, compared to $15.1bn in the same quarter of the previous year.

Matthew Benson, MENA Transaction Advisory Services Leader, EY, says: “The year began with strong optimism and promise for the IPO market in the MENA region. Following the interest in Saudi Aramco’s IPO, there was a marked increase in companies pursuing listings on GCC stock exchanges. The drop in economic growth and disruption across various industries caused by the Covid-19 pandemic, as well as the decline in demand for oil, and reduction in oil prices, have forced potential issuers to rethink timelines and delay their bourse debuts – a prudent move given the current market scenario. Potential issuers nevertheless continue to seek new capital, in some cases driven by the current market environment.”

Saudi Arabia leads the pack 
The Saudi bourse led IPO activity in the MENA region with two listings in Q1 2020 having net proceeds of $748.7m.

Dr. Sulaiman Al-Habib Medical Services Group raised $700.9m (main market) by issuing 15 per cent of its shares, while Sumou Real Estate Co raised $47.8m (Nomu market) by issuing 30 per cent of its shares.

Saudi Aramco’s listing prodded Tadawul to ninth place globally in terms of market capitalisation.

In Oman, Aman REIF, a REIT listing, offloaded 50 per cent of its shares on the Muscat bourse in a deal raising $52.5m in January 2020.

Meanwhile, in Egypt, Emerald Real Estate Investments raised $13m in February 2020 by offering 28 per cent of its shares and was oversubscribed 134 per cent.

The Egyptian capital market was expecting as many as 14 initial public offerings in 2020, but experienced delays due to the ongoing Covid-19 pandemic.

GCC countries adopt additional standards
The Bahrain Bourse adopted new listing rules and allowed a three-month grace period for companies currently listed on the market to meet new requirements.

Meanwhile, Kuwait strengthened its capital markets with the privatisation of its stock exchange in December 2019 and the introduction of the BK Main 50 Index.

Read: Exclusive: Boursa Kuwait CEO on its privatisation agenda

Gregory Hughes, MENA IPO Leader, EY, says: “We have seen that capital markets around the region have granted additional flexibility to public companies during the Covid-19 crisis period. The IPO markets are not likely to quickly rebound in Q2 or Q3 2020, but we are aware of several companies that are preparing for offerings after this period. Investor sentiment will continue to be cautious, given significant volatility in the markets and uncertainty regarding future events including Covid-19 impact, oil pricing, and the US elections amongst other things.”