UAE, Saudi IPOs spur Mideast volumes to 10-year high

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UAE, Saudi IPOs spur Mideast volumes to 10-year high
Investors observe stock prices at the Dubai Financial Market. The UAE had the largest share in capital raising in the region.

dubai - In the Middle East, IPO activity saw a 315 per cent increase in value


Issac John

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Published: Thu 21 Dec 2017, 6:01 PM

Last updated: Thu 21 Dec 2017, 8:03 PM

Led by the UAE and Saudi Arabia, the overall initial public offering (IPO) activity from the Middle East in 2017 saw a 225 per cent surge as across the world, IPO volumes reached the highest level in a decade, global law firm Baker McKenzie said on Thursday.

In the Middle East, IPO activity, both domestic and cross-border, saw a 315 per cent increase in value. The UAE and Saudi Arabia led domestic IPO activity with four listings each, followed by Oman with three and Qatar with one, the law firm said in a report.

The UAE had the largest share (64.4 per cent) in terms of capital raising from the region, with proceeds of $1.3 billion from its four listings. This value excludes the $851 million listing of Abu Dhabi National Oil Company for Distribution - the biggest listing on the Abu Dhabi Stock Exchange in the past decade - which was only priced on December 13, 2017.

The Middle East also saw 300 per cent increase in value of domestic deals while securing the first cross-border listing in the region since 2015.
According to Cross-Border IPO Index, low market volatility as a result of the relatively benign geopolitical environment and improved market sentiment were behind the increase in global IPO activity, which saw both cross-border and domestic activity grow. In total, 1,694 companies raised $206.6 billion from IPOs, a jump of around a third in both value and volume on 2016.

Cross-border deals jumped by 60 per cent in volume, growing in all regions, including Latin America, which saw its first cross-border listing in 10 years. Cross-border capital raising also grew in value in 2017 by 25 per cent, the majority of which was accounted for by a strong performance in Europe, Middle East and Africa and North America. That helped offset a decline in Asia Pacific cross-border capital raising, the report said.

The UAE recorded the only cross-border listing in the Middle East region, by ADES International Holding, which raised $243.5 million on the London Stock Exchange.

"The economic activity associated with IPOs is vital for the overall development of regional capital markets, which in turn will stimulate further growth in Arab economies," said Mazen Boustany, head of banking and finance at Baker McKenzie Habib Al Mulla in the UAE.

On the domestic front, IPO values were up an impressive 55 per cent year on year from $676 million to $2.1 billion in 2017, while volumes also increased by 40 per cent, from four IPOs in 2016 to 12 IPOs in 2017. The number of IPOs this year compared to 2015 climbed by 22 per cent, although capital raised fell by three per cent.

"Stability of oil prices and the political situation will contribute to developing market penetration and enhancing liquidity," added Zahi Younes, capital markets/M&A partner at Baker McKenzie's associated firm in Saudi Arabia. "As per our recent global transactions forecast, strong economic reforms and privatisation plans in Saudi Arabia will lead to an increase in investor appetite and are likely to drive IPO activity in 2018."

The top sectors by volume for domestic IPOs in the region in 2017 were financials and energy and power, with three listings each, and the top sector by value was the real estate sector, with more than $1.2 billion raised from one listing.


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