Saudi tops MENA IPO list as four companies raised $1.8bln in Q3 2021: EY

ESG factors gaining importance in investor scrutiny

  
Riyadh, Saudi Arabia. Image used for illustrative purpose.

Riyadh, Saudi Arabia. Image used for illustrative purpose.

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The Middle East North Africa (MENA) region saw four initial public offerings (IPO) raise a total of $1.836 billion during the third quarter of 2021, according to EY MENA IPO Eye Q3 2021 report.  This compares with the solitary IPO in the year-ago period which was valued at $115.9 million.

Year-to-date, the 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 Q3 2021, the report released on Tuesday said.

The four IPOs in Q3 2021 were Al Yah Satellite Communications Company (Yahsat), Tanmiah Food Company, Mataam Bayt AlShatira Lilwajbat Alsariya Company (Burgerizzr) and Arabian Internet and Communications Services Company (Solutions by stc).

During Q3 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 percent 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 Tadawul IPO.

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 percent of its shares. This was followed by the listing of ADNOC Drilling and Fertiglobe during Q4 2021. Other listings in the pipeline include Emirates Global Aluminium and Abu Dhabi Ports.

"As MENA economies rebound from the pandemic and oil prices remain favorable, companies with strong fundamentals continue to receive ample investor interest and the pipeline of IPO candidates is ever increasing," said Matthew Benson, EY MENA Strategy and Transactions Leader.

The report noted that ESG mandates might put a brake on the IPOs as institutional investors are raising the stakes when it comes to assessing company performance using ESG factors.

As MENA companies look to raise capital in the public markets, the lack of a strong sustainability strategy and ESG disclosure can create a value gap, the report said.

Meanwhile, the Securities and Commodities Authority (SCA) in the UAE has made it mandatory for listed companies to publish an annual sustainability report.

Several MENA stock exchanges such as the Abu Dhabi Stock Exchange, Dubai Financial Market, Boursa Kuwait and the Bahrain Bourse have issued their own ESG reporting guidelines.

(Writing by Brinda Darasha; editing by Seban Scaria) 

brinda.darasha@refinitiv.com 

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© ZAWYA 2021

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