MENA IPO Activity Remains Resilient

Initial Public Offering (IPO) activity in the Middle East and North Africa (MENA) region remained resilient with 14 IPOs raising $2.64 billion in proceeds during the second quarter of this year.

According to the EY MENA IPO Eye Q2-2024 report, the number of IPOs increased from the 13 listings in Q2 of 2023, with a corresponding increase in proceeds of 45.3% against the comparative quarter.

During the second quarter, Dr Soliman Abdul Kader Fakeeh Hospital Co. was listed on the Saudi Exchange main market Tadawul, raising the highest proceeds of the quarter – $764 million and contributed 29% of the overall IPO proceeds in the region.

This was followed by Alef Education Consultancy LLC with its listing on the Abu Dhabi Securities Exchange (ADX), which contributed 19.5% of proceeds with the $515 million raised.

Eight out of the 14 MENA IPOs listed in the second quarter had shown a positive return as of the 30 June 2024 share price in comparison with their IPO price, with Miahona Company achieving the highest gain of 90.4% within the period.

Stock exchanges across the MENA region exhibited varied performances. MSCI Emerging Markets Index ended Q2 2024 with a gain of 4.2%, making it the top-performing market in the GCC, followed by the gain of 1% from Qatar Exchange (QE) general index.

Brad Watson, EY MENA Strategy and Transactions Leader, said that whilst the MENA equity markets continue to face challenges, Q2 of 2024 was a stronger quarter with a total of 14 IPOs raising $2.6 billion. Eleven of the companies listed were in Saudi markets including five of which were on the Tadawul main market).

“Increased liquidity driven by higher oil prices, economic recovery, and positive market sentiment has kept the IPO activity in the region buoyant with a strong pipeline for H2 of 2024,” Watson added.

Saudi Arabia Leads

As with Q1 of 2024, Saudi Arabia stood at the forefront of the region’s IPO activity in terms of the number of listings – 11 out of 14 – in Q2 of 2024 raising $1.6 billion. After Dr Soliman Abdul Kader Fakeeh Hospital Co, Saudi Manpower Solutions Company (SMASCO) raised $240 million and Rasan Information Technology Company at $224 million.

Five out of the 11 IPOs were listed on the Tadawul, including the top three contributors, with the remaining six taking place on the Nomu parallel market with total proceeds of $85.4 million. Funds raised originate from a number of different sectors including healthcare, equipment services, commercial and professional services, materials, mineral resources, and finance and insurance services.

The Kingdom also leads in the IPO pipeline activity, with 14 Saudi companies announcing their intention to list by the end of the year. These 14 companies include Riyad Capital LLC, United International Holding Co. and Arabian Mills for Food Products, among others.

UAE Strong Contributor

The UAE’s Alef Education Consultancy LLC, raised $515 million in the academic and education services sector with its IPO. The listing of Spinneys 1961 Holding Plc, a family business, on the Dubai Financial Market (DFM) raised $375 million. Together, these two IPO listings in the UAE accounted for 33.8% of the quarter’s total proceeds.

Marking the first listing in Kuwait since Q4 of 2019, Beyout Investment Group (BIG) Holding Co. raised $147 million on the Kuwait Boursa (Kuwait Stock Exchange).

The remainder of 2024 is set to see robust activity in the IPO market, with an additional 16 private companies and seven funds across various sectors intending to list on the MENA exchanges. One company in the UAE has also obtained approval to list, alongside Go Bus in Egypt.

Gregory Hughes, EY MENA IPO Leader, said that the MENA IPO market continued to be led by the Saudi Arabia and the UAE markets.

There is a continued focus on economic diversification away from oil and gas, with the MENA region continuing to see listings from a variety of sectors including health care, education, consumer goods and professional services, Hughes said.

“As we enter a phase of declining interest rates and continue to witness major country elections around the world, we will monitor with interest the subsequent impact on regional markets and IPO activity,” he added.

Global IPO Market

Globally, IPO activity declined in comparison to Q2 of 2023 as the number of IPOs dropped by 15% from 317 to 271, and proceeds decreased by 31% falling from $40.4 billion to $27.8 billion.

The Europe, Middle East, India and Africa (EMEIA) region, however, made a remarkable comeback, with inflation approaching ‘normal’ levels, interest rates falling, stock markets rallying to hit all-time highs, and volatility remaining low. This comeback saw the region regain the top global IPO market share by number – 45% of deal volume and 46% of value – for the first time in 16 years.