The Mena region raised $881.5 million (Dh3.235 billion) through nine IPOs including four Real Estate Investment Trust (Reit) listings in second-quarter 2018, according to the latest EY Mena IPO Eye report.
Both IPO value and activity increased year-on-year by 42.8 per cent and 12.5 per cent respectively. Out of the nine deals in Mena, seven IPOs were recorded in the GCC - including three Reit listings - raising $780.3 million.
Saudi Arabia led the Mena IPO activity, recording four out of nine IPOs in Q2 2018, part of an increasing trend of Reits being listed on the exchange and a reflection of the underlining investor interest in real estate assets in the country.
The highest value IPO in the quarter was the Mefic Reit Fund IPO, listed on the Saudi Stock Exchange, which raised US$237.5 million.
"The future inclusion of Saudi Arabia in the MSCI emerging markets index has drawn positive attention to the country, attracting investors from across the world. The country's Capital Market Authority has brought in a mandatory corporate governance code, considerably relaxed rules for foreign investors, and raised settlement rules for the domestic Tadawul stock market toward global standards, which have all led to a favorable transacting environment," said Phil Gandier, Mena Transactions Leader, EY.
Oman was the only other GCC country with IPO activity in Q2; the Muscat Securities Market (MSM) recorded a single IPO in Q2 2018 raising $12.8 million. Looking to the future, the MSM has an IPO pipeline of over 10 companies that are expected to complete their listings in the next two to three years.
In the wider Mena region, Egypt and Morocco recorded one deal each. Egypt in particular is seeing an increasing number of both government-owned and private companies looking to tap the equity markets through IPO. The Egyptian government's IPO program intends to list 23 public sector companies on the EGX, which is also in line with the 2018-2019 proposed budget aims of the government.
The real estate sector raised the highest capital, with four Reits raising $553 million, followed by $225 million raised in the oil and gas sector and $57.2 million in financial services.
"Although oil prices have increased, Mena countries are still feeling the impact of the significant drop in oil prices in recent years. IPO activity was relatively slow in H1 2018, but activity is expected to pick up in H2 2018 and beyond owing to the strong upcoming IPO pipeline," said Gregory Hughes, Mena IPO Leader, EY.
Globally, IPO activity and proceeds dipped in Q2 2018, with 325 IPOs raising $45 billion, a decrease of 26 per cent and 19 per cent respectively, in comparison with Q2 2017.