|03 November, 2019

MENA IPO value drops by 45% in Q3 2019: EY

Two deals were recorded in Saudi Arabia and Egypt in the quarter, compared to four deals in Q3 2018

Saudi men inspect a screen showing stock prices at ANB Bank in Riyadh, Saudi Arabia September 16, 2019.

Saudi men inspect a screen showing stock prices at ANB Bank in Riyadh, Saudi Arabia September 16, 2019.

REUTERS/Ahmed Yosri

Initial Public Offering (IPO) deal value in the MENA region dropped nearly by half in Q3 2019 compared to the same period last year, a report by EY showed.

The EY MENA IPO Eye Report said that IPO value in the region fell by 45.3 percent in Q3 2019 to $190 million, from $347.3 million in Q3 2018.

Two deals were recorded in Saudi Arabia and Egypt in the quarter, compared to four deals in Q3 2018, the EY report showed.

Matthew Benson, MENA Transaction Advisory Services Leader, EY, said: “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,” Benson added.

Egypt led IPO value with its listing of Fawry for Banking Technology and Electronic Payments, raising $97 million in August 2019. The listing was the first IPO of a private company on the Egyptian Stock Exchange since Sarwa Capital in October 2018.

In July 2019, Ataa Educational Company, one of Saudi Arabia’s biggest private school operators, raised $93 million with its listing; the fourth listing in Riyadh this year.

“Riyadh has been encouraging more family owned companies to list on the domestic stock market,” EY’s report noted.

Gregory Hughes, MENA IPO Leader, EY, said: “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 are updating their regulations to attract foreign investors according to the report. The Securities and Commodities Authority of the United Arab Emirates is planning a host of measures to help boost investor confidence.

Oman is planning to implement a new regulation that removes the upper capital limit for foreign investors and Kuwait’s non-oil related activity has shown signs of recovery, due to expansionary government budget and accommodative monetary policy, the report added.

Global IPO deals fell 24 percent in Q3 2019 compared to Q3 2018, with the world witnessing 256 IPOs, raising $40.2 billion.

(Reporting by Gerard Aoun, editing by Mily Chakrabarty)

(gerard.aoun@refinitiv.com)

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© ZAWYA 2019

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