The Middle East and North African IPO market is poised to see robust activity in the remainder of 2024 with an additional 16 private companies and seven funds across various sectors intending to list on the region’s exchanges.
After a resilient first half led by the UAE and Saudi Arabia, the upcoming IPOs will be spurred by the region’s ongoing privatisation drive on the back of increased liquidity, economic recovery, and positive market sentiment, market experts say.
The first half of 2024 recorded a 45.3 per cent surge in IPOs that raised $2.64 billion.
An Ernst & Young report on IPO activity in the Mena region noted that of the 16 companies intending to list in the coming months, 14 are in Saudi Arabia, including Riyad Capital, United International Holding Co. and Arabian Mills for Food Products. One company in the UAE has also obtained approval to list, alongside Go Bus in Egypt, said the E&Y report.
“There is a continued focus on economic diversification away from oil and gas, with the Mena region continuing to see listings from various sectors including health care, education, consumer goods, and professional services. 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,” said Gregory Hughes, EY Mena IPO leader.
He said the Mena IPO market continued to be led by the KSA and the UAE markets as the Kuwait Boursa welcomed its first listing since 2019.
The second quarter of this year saw the listing of Dr Soliman Abdul Kader Fakeeh Hospital Co on Saudi Arabia’s main market, raising $764 million, 29 per cent of the region’s IPO proceeds for the quarter, followed by Abu Dhabi Securities Exchange’s (ADX) listing of Alef Education Consultancy, which contributed 19.5 per cent or $515 million. The listing of Spinneys 1961 Holding Plc, a family business, on the Dubai Financial Market (DFM) raised $375 million.
Alef Education Consultancy and Spinneys 1961 Holding accounted for 33.8 per cent of the region’s total proceeds for the quarter.
Saudi IPOs raised $1.6 billion during the quarter, with Saudi Manpower Solutions Company raising the kingdom’s second-largest amount and Rasan Information Technology Company coming in third at $224 million.
Boursa Kuwait saw its first listing since the fourth quarter of 2019, with the listing of Beyout Investment Group (BIG Holding) raising $147 million.
“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 2024,” E&Y said.
Eight out of the 14 Mena IPOs listed in Q2 2024 had shown a positive return as of the 30 June 2024 share price compared with their IPO price, with Miahona Company achieving the highest gain of 90.4 per cent.
Stock exchanges across the region exhibited varied performances. MSCI Emerging Markets Index ended Q2 2024 with a gain of 4.2 per cent, making it the top-performing market in the GCC, followed by the gain of 1.0 per cent from Qatar Exchange general index.
Globally, IPO activity declined compared to Q2 2023, down 15 percent from 317 to 271, with proceeds down by 31 per cent. Data showed that companies from the GCC region raised a total of $10.79 billion in IPOs last year.
According to Fitch Ratings, the sale of minority stakes by government-linked entities and the establishment of public subscription funds will also accelerate the number of IPOs in the region this year.