Saudi Arabia leads regional growth, accounting for four out of nine listings
Regional IPOs raise $881.5m in second quarter, says EY
Initial public offerings in the Middle East and North Africa raised $881.5 million (Dh3.23 billion) in the second quarter of the year, led by listings in Saudi Arabia and Oman, according to Ernst & Young.
The value and volumes of listings increased 42.8 per cent and 12.5 per cent year-on-year respectively during the second quarter, compared with the same period last year, the consultancy said in a report on Tuesday.
Of the nine listings, four were from Saudi Arabia, where a number of real estate investment trusts have been listed on its exchange.
“The future inclusion of Saudi Arabia in the MSCI emerging markets index has drawn positive attention to the country, attracting investors from across the world,” said Phil Gandier, Mena transactions leader at EY.
Saudi Arabia’s favourable transaction environment was mainly due to the capital market authority’s mandatory corporate governance code, relaxed rules for foreign investors as well as new settlement rules on the Tadawul stock exchange, he said.
As the region’s biggest economy, the kingdom was upgraded to MSCI’s emerging market status in June, a decision that is widely expected to improve liquidity in the world’s top oil-exporting nation.
The highest value for an IPO in Saudi Arabia during the quarter was the listing of Mefic Reit Fund, which raised $237.5m. Real estate investment trusts are listed funds that own income-producing commercial real estate and distribute 80 to 90 per cent of their income as dividends to shareholders.
Oman was the only other Arabian Gulf state that had any IPO activity in the second quarter. The Muscat Securities Market has a pipeline of about 10 companies planning to list over the next two to three years.
The real estate sector accounted for the most number of transactions in Mena, raising $553m from four Reits, EY said. The oil and gas and financial sector raised $225m and $57.2m, respectively.
Elsewhere in the region, Egypt and Morocco completed one deal each, with the former in particular registering increased activity from state-owned and private entities looking to tap into the capital markets. The Egyptian government plans to list 23 public sector companies on the stock market, in line with its budgetary requirements.