Mena IPO activity leaps in Q4
Published: Thu 12 Mar 2020, 6:56 PM
Last updated: Fri 13 Mar 2020, 9:13 AM
Led by Saudi Aramco's massive $29.4 billion initial public offering proceeds, five IPOs in the Middle East and North Africa region raised $30 billion in the fourth quarter of 2019, recording a sizeable increase both in terms of the deal volume and value compared with the two IPOs that raised $190 million in the third quarter.
According to the EY Mena IPO Eye Report, global IPO exchange activity also continued to pick up in the fourth quarter, with 353 IPOs raising $84.5 billion, marking an increase of 25 per cent in IPO volumes compared with the first quarter of 2019.
Matthew Benson, Mena transaction advisory services leader at EY, said both the global market and the Mena market saw activity pick up during the fourth quarter of 2019. The trend over multiple quarters indicates a recent slowing down in overall IPO activity. "In the Mena region, this has been driven by the decline in REITs and Nomu listings in Saudi Arabia since 2017 and 2018, and IPO activity has remained broadly stable year-on-year," he added.
Oil giang Saudi Aramco led the IPO activity by issuing 1.5 per cent of its equity shares initially in a deal that raised $25.6 billion. The value further increased after the oil giant issued 450 million additional shares worth $3.8 billion via a green-shoe option, taking the total proceeds to $29.4 billion, or 1.7 per cent of its shares. The deal made it, worldwide, the largest IPO on record by proceeds.
Boursa Kuwait, formerly known as the Kuwaiti Stock Exchange, raised $33 million by issuing 50 per cent of its own shares in October 2019. This was the first IPO in Kuwait since Kuwait Telecom Company raised $98 million in 2008. Kuwait is the latest in the GCC market to join Emerging Market status.
In Oman, Musandam Power Company led the IPO activity by issuing 40 per cent of its equity shares on the Muscat Securities Market in a deal that raised $23.1 million in November 2019. The EY report said Oman's Capital Market Authority has approved the first prospectus of Aman Reit, which allows foreign investors to own real estate in the sultanate indirectly.
"Oman's new Foreign Capital Investment Law awards investors incentives, privileges, and guarantees, which include 100 per cent foreign ownership, minimal capital requirements, and no fundamental changes in the investment project without ministry approvals," said the report.
In Egypt, a pharmaceutical company was the third company to go public on Egypt Stock Exchange in 2019. Rameda's IPO was oversubscribed 117 per cent and raised $108.7 million. The other two companies were Fawry, which made its trading debut in third quarter 2019, and Speed Medical Company which listed in the second quarter 2019.
Gregory Hughes, Mena IPO leader at EY, said until the Saudi Aramco IPO, economic challenges continued to impact investor confidence in the region in 2019. "Though the recent MSCI and FTSE inclusions, privatisation drives, and government initiatives from GCC countries and Egypt are promising, both businesses and investors will be proceeding with caution during the first half of 2020."