Mena companies raised $1.5bn through seven IPOs in third quarter, EY says

The listing of Dubai toll operator Salik, which sold a 20% stake, was the largest in the region

Traders at the Dubai Financial Market. The UAE and Saudi Arabia continued to make up the majority of the listings in the Mena region. Jeffrey E Biteng / The National

Companies in the Mena region raised about $1.5 billion in the third quarter of 2022 through seven initial public offerings across the region's capital markets, led by UAE and Saudi Arabia.

The number of Mena-based companies listed on the region's bourses this year to date has more than tripled to 31 IPOs, according to the latest report by global consultancy EY.

They raised a total of $14.7bn collectively this year to date, an increase of 550 per cent compared with the same period in 2021.

“Despite IPO volumes and values declining significantly in the majority of other global markets, the Mena region continues to forge its own path with a steady stream of new listings in Q3 [the third quarter], adding to the large number of IPOs already announced across exchanges in the year to date,” said Brad Watson, EY's Mena strategy and transactions head.

“While Saudi Arabia and the UAE make up the majority of new listings, we are also seeing increased signs of future activity in some of the smaller markets of the region — particularly Kuwait, Oman and Qatar.”

Various government-owned companies have gone public in the UAE and private companies are now following suit.

Earlier this week, Bayanat, a geospatial data products and services provider owned by Abu Dhabi-based artificial intelligence and cloud computing company G42, said it aimed to raise more than Dh628.5 million ($171m) from its IPO.

Earlier this month, Abu Dhabi healthcare provider Burjeel Holdings listed its shares on the Abu Dhabi Securities Exchange after raising more than Dh1.1bn from the sale of an 11 per cent stake through the company’s IPO.

Other companies to list on the bourse this year include Borouge, the venture between Adnoc and Austrian chemicals producer Borealis, and the Abu Dhabi Ports Group, operator of industrial cities and free zones in the emirate.

Dubai has registered a series of IPOs of state enterprises aimed at boosting the size of the emirate's capital market to about Dh3 trillion.

As part of these plans, Dubai said earlier this week it intended to sell a 10 per cent stake in Emirates Central Cooling Systems Corporation, better known as Empower, the emirate's district cooling provider.

Dubai's most recent IPO was in September, when toll operator Salik raised Dh3.73bn from the sale of a 24.9 per cent stake.

Dewa raised Dh22.41bn from its IPO earlier in the year, making it the largest public float in the Middle East and Europe since Saudi Aramco went public in 2019.

Tecom, the operator of business districts in Dubai, also made its debut on the DFM in early July, having raised Dh1.7bn from its IPO a month earlier.

Globally, there have been a total of 992 IPOs so far this year, down 44 per cent from the same period in 2021, EY said.

Together, these global companies raised $146bn, a 57 per cent annual decrease as companies and investors continue to face mounting macroeconomic challenges, market uncertainty, increasing volatility and falling global equity prices, the report said.

“The Mena region, however, has generally bucked the global trend, with IPO activity and pipeline continuing to remain strong despite the weaker global sentiment,” EY said.

Regionally, Salik's listing became the largest Mena IPO during the third quarter. It was also the fourth largest in the region so far this year.

The IPO was oversubscribed more than 49 times across all tranches, with total gross demand at $50.2bn.

IPO activity returned to Morocco for the first time since last year, with Disty Technologies SA, a Moroccan IT company, raising about $17m on the Casablanca Stock Exchange, the report showed.

Fourth-quarter IPO outlook

Companies in Saudi Arabia proceeded with two IPOs on the Tadawul bourse’s Main Market and three IPOs on the Nomu-Parallel Market, raising $490m in proceeds in the third quarter.

Of these, Alamar Foods Company’s public offering was the largest, with $326m raised and the IPO order book oversubscribed about 48 times.

Overall, 2022 has been a strong year for IPOs throughout the Mena region, with investor confidence remaining high despite challenging financial headwinds across the world, said Gregory Hughes, EY Mena IPO and transaction diligence head.

“As we look into Q4 [the fourth quarter], we see no signs of that changing, with several prominent companies in the region having completed their IPOs,” he said.

“We are also expecting increased activity in dual listings to tap varied liquidity pools; and continued government divestment processes in the UAE, Oman and other countries, as well as movement from family businesses, which are believed to be planning market entry in different parts of the region.”