MENA IPO down in H1 2023, but experts still bullish

Optimism up in the H2  
MENA IPO down in H1 2023, but experts still bullish
More companies in the region are tapping IPOs to raise funds

The Middle East and North Africa (MENA) IPO space went down four percent in the first half of 2023, but experts are still optimistic for the remaining months.

In a report, global accounting firm Ernst & Young (EY) said a total of 23 IPOs were registered in the MENA region from January to June 2023, down by 4 percent year-on-year compared to the same period in 2022.

All the IPOs were registered in the GCC with total proceeds of $5.2 bn.

UAE and Saudi Arabia leading the growth

However, EY said there is a promising IPO pipeline in the MENA region for the remainder of the year.

EY noted the UAE and Saudi Arabia are leading the growth. In addition, both countries appear to have the most active markets in the region.

For instance, in Saudi Arabia 23 companies disclosed plans to be listed on the Saudi Stock Exchange, or Tadawul, for H2 2023.

Moreover, two companies in Egypt also intend to be listed for IPOs.

Read: GCC markets mostly positive ahead of monetary policy decisions

“The MENA IPO pipeline for H2 2023 and 2024 remains very healthy with several IPOs already announced in KSA and multiple processes ongoing across the broader region, with further transactions planned in the UAE, Oman, Qatar, and Kuwait,” said Gregory Hughes, EY MENA IPO, and transaction diligence leader.

Furthermore, Hughes said IPO activity in the region spans across sectors. Many IPOs have also been completed among a mix of family businesses, state-backed enterprises, and private equity stakeholders.

Second quarter momentum

Nonetheless, momentum has built up in the second quarter of the year, EY noted.

First, Saudi Arabia listed four companies on the Tadawul, raising $800 mn. Moreover, seven other IPOs were listed on the Tadawul (Nomu) parallel equity market with total proceeds of $100 mn.

For instance, Jamjoom Pharmaceuticals Factory Company raised $336 mn, the highest raised on the Tadawul for the quarter.

Subsequently, First Milling Company SJSC raised $266.4 mn, according to EY.

The two companies offered a free float of 30 percent of their share capital and were oversubscribed.

ADNOC, the largest IPO in Abu Dhabi

Meanwhile, in the UAE, ADNOC L&S raised $769.5 mn at the Abu Dhabi Securities Exchange (ADX) when it completed its IPO. It was the highest over subscription for a UAE book-build IPO at 163 times in aggregate.

The Dubai Financial Market (DFM) saw Al Ansari Financial Services PJSC raising $210.4 mn in proceeds. Al Ansari is the UAE’s first family-owned company to be listed.

Brad Watson, EY MENA strategy and transactions leader, said the region’s economy remains strong.

He explained, “The MENA region continues to have strong economies and low debt. Coupled with the reform and deregulation in the region, it continues to be an attractive environment for new listings.”

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