The Mena region saw four initial public offerings (IPOs) to raise total proceeds of $1.836 billion during the third quarter of 2021, an increase of 1,483 per cent in value on the same quarter in 2020.
According to the EY Mena IPO Eye Q3 2021 report, the number of IPOs increased from one in July-September 2020 quarter, representing a 300 per cent surge.
The year-to-date total number of IPOs stands at eight in the Mena region so far this year, with a combined value of $2.261 billion. Direct listings continued their momentum with seven such listings occurring during the third quarter of 2021.
Al Yah Satellite Communications Company (Yahsat), Tanmiah Food Company (Tanmiah), Mataam Bayt AlShatira Lilwajbat Alsariya Company (Burgerizzr) and Arabian Internet and Communications Services Company (Solutions by stc) were the four companies who opted for the IPO in third quarter.
“The Yahsat listing is the first IPO to occur on the Abu Dhabi Securities Exchange (ADX) since 2017, raising $730.6 million by offering 40 per cent of its shares. The offering was oversubscribed multiple times, with Mubadala continuing to retain a circa 60 per cent shareholding in the company,” according to the report.
Equity markets have also had an exceptional year so far, with the ADX continuing to be the top performer with a year-to-date return of 52.6 per cent. Saudi Arabia’s Tadawul is the second-best performing Mena market with a year-to-date return of 32.3 per cent.
Widespread regulatory changes
The third quarter of 2021 saw a series of notable regulatory changes with Qatar amending its Commercial Companies Law, while the ADX and Dubai Financial Market (DFM) extended their trading hours and waived the minimum commission fee on trades for all listed securities. The Capital Market Authority of Saudi Arabia approved three IPOs and one direct listing on the Nomu–Parallel Market. In addition, three IPOs on the main market received approvals.
Matthew Benson, EY Mena Strategy and Transactions Leader, said the number of IPOs increased 300 per cent during the third quarter of 2021 compared to the same period last year when there was only one IPO on the Mena markets, with proceeds increasing 1,483% compared to Q3 2020.
“This brings the total number of IPOs year-to-date in 2021 to eight, with total proceeds of $2.3 billion. As Mena economies rebound from the pandemic and oil prices remain favourable, companies with strong fundamentals continue to receive ample investor interest and the pipeline of IPO candidates is ever increasing,” he said.
Saudi Arabia lists 3 IPOs in Q3
During the third quarter of 2021, Saudi Arabia once again led activity in the IPO market within the region. In August 2021, Tanmiah listed on the Tadawul, raising $107.2 million by offering 30 per cent of its shares. Burgerizzr also concluded its IPO on the Nomu–Parallel Market and raised $31.8 million. Solutions by stc, a unit of the Saudi Telecoms Company, raised $966.4 million in its IPO on the Tadawul.
UAE: ADX lists its first IPO in four years
The ADX officially ended its four-year IPO drought with the listing of Yahsat in July-September 2021 quarter, followed by the listing of Adnoc Drilling and Fertiglobe during the fourth quarter of 2021. Other listings in the pipeline include Emirates Global Aluminium and Abu Dhabi Ports.
Oman: Signs of recovery
According to the IMF, Oman’s economy is set to recover in 2021, with non-hydrocarbon GDP growth of 1.5 per cent as the vaccine rollout gradually restores domestic activity, alongside the recovery of external demand. Oil production in Oman is projected to increase after the current Opec+ agreement expires in April 2022, while inflation in Oman has been subdued.
Egypt: Exchange paves way for SPACs
The Egyptian Exchange (EGX) proposed changes to the EGX listing and delisting rules of the EGX, paving the way for SPACs to list. The proposed amendments include a new article that will allow listings of companies with the purpose of acquisition, provided that the capital increases are invested in savings vessels with a fixed return and set away for the recipients of subscriptions until acquisition.
In addition, new regulations for the EGX30 Index came into force in August 2021, mandating that a maximum of five companies operating in each sector can be included in the index. The EGX expects these changes to improve diversity across the index, making it more attractive to investors.
The changes that Egypt’s Financial Regulatory Authority (FRA) have introduced will also reduce the amount of capital that companies need to offer to the public, from 25 per cent of overall shares to just one per cent of those in the EGX’s total free-float market capitalisation. And from 2022, EGX listed companies and unlisted non-banking financial services will be mandated to produce ESG reports that include ESG metrics within their annual financial statements.
Gregory Hughes, EY Mena IPO and Transaction Diligence Leader, said the Mena IPO market activity has picked up in Q3 2021 with four listings raising a total of $1.8 billion in proceeds.
“Saudi Arabia and Abu Dhabi are leading the IPO activity and continue to have a strong pipeline for the coming quarters, while activity in Dubai continues to lag. We have also seen the re-emergence of larger IPOs, which have been met with solid investor interest, further demonstrating the ample liquidity that is currently available in the market. Around the world, however, we are seeing IPOs being pulled or delayed in multiple markets due to the large number of offerings looking for investment, so we need to remain vigilant in this region as the pipeline grows,” he said.
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