EY: Two MENA IPO deals in KSA and Egypt raise US$190m in Q3 2019

According to the EY MENA IPO Eye Report, Initial Public Offering (IPO) deal value in the Middle East & North Africa (MENA) region decreased by 45.3% to US$190.0m in Q3 2019, down from US$347.3m in Q3 2018. Two deals were recorded in the Kingdom of Saudi Arabia (KSA) and Egypt in Q3 2019, a decrease of 50% from the four deals listed in Q3 2018.

Matthew Benson, MENA Transaction Advisory Services Leader, EY, says:

“The global market as well as the MENA market witnessed a quieter third quarter in 2019 as far as Initial Public Offerings (IPOs) were concerned. Nevertheless, a backlog has grown during that time and as we enter the traditionally peak season, and IPO activity is expected to pick up in Q4 2019 and into 2020 as there hopefully becomes more clarity around global geo-political developments, including US-China-EU trade relations, Hong Kong, and Brexit.”

Egypt leads in IPO deal value in Q3 2019

Egypt led IPO value with its listing of Fawry for Banking Technology and Electronic Payments S.A.E., a company in the e-payments sector, raising US$97.0m in August 2019. The listing was oversubscribed by 30.3 times. The listing was the first IPO of a private company on the Egyptian Stock Exchange since Sarwa Capital in October 2018. 

The current economic boost in Egypt has been hailed by investors since the country registered a growth of 5.6%, the highest economic growth since June 2010. Furthermore, inflation eased in August and reached its lowest rate since 2013.

Saudi Arabia encourages family owned companies to list on domestic market

The city of Riyadh has been encouraging more family owned companies to list on the domestic stock market. In July 2019, Ataa Educational Company, one of Saudi Arabia’s biggest private school operators, raised US$93.0m with its listing – the fourth listing in Riyadh this year. 

Gregory Hughes, MENA IPO Leader, EY, says:

“IPO listings in the MENA region may have slowed down during the third quarter of this year versus the prior year, but there remains a strong pipeline of companies finalizing the details of their listing for a launch in the next twelve months both regionally and internationally.”

GCC countries update regulations to attract foreign investors 

The Securities and Commodities Authority of the United Arab Emirates is planning a host of measures to help boost investor confidence. These measures include setting up a platform for unprofitable firms, mandating that at least one female member is on the board of listed companies, and requiring that all firms have a board of directors with the appropriate expertise, knowledge, and independence standards. 

In an effort to promote foreign investment in domestic companies, Oman is planning to implement a new regulation whereby there will be no upper capital limit for foreign investors. The regulation is expected to come into effect from January 2020. 

In Kuwait, non-oil related activity has shown signs of recovery, due to expansionary government budget and accommodative monetary policy. Credit growth was 5.2% in H1 2019 and has further been boosted by improvement in business lending, low inflation, and lower interest rates. 

Global IPO activity slows down in Q3 2019

Global IPO exchange activity was relatively slow compared to Q3 2018 with the total number of deals down by 24% and proceeds down by 22%. Globally, Q3 2019 witnessed 256 IPOs raising US$40.2b. Technology, healthcare, and industrials remained in the top three sectors by the number of IPOs issued. Although global deal numbers are down, first-day returns on the main markets globally were broadly positive.