Twenty four MENA IPOs raise $13.5 billion in H1 2022

DUBAI, Aug 3: According to the latest EY MENA IPO Eye report, the MENA region witnessed a 500% year-onyear increase in the number of companies listing during H1 2022 with 24 IPOs raising proceeds of US$13.5 billion – an increase of 2,952% in value when compared to the same period in 2021.

In Kuwait, Ali Alghanim and Sons Automotive Company raised new capital of US$323million through a private placement before listing on Boursa Kuwait.

During the second quarter of 2022, MENA IPO markets saw nine IPOs raise approximately US$9billion in proceeds. Although the number of IPOs decreased by 40% when compared with Q1 2022, the proceeds raised increased by 133%.

Globally, 630 IPOs raised US$95.4 billion in proceeds during H1 2022, which is a significant drop of 46% in the number of IPOs and 58% in the proceeds raised, as compared to H1 2021. Heightened volatility caused by geopolitical tensions and macroeconomic factors, declining valuation and poor post-IPO share price performance led to the postponement of many global IPOs during the first half of 2022.

Brad Watson, EY MENA Strategy and Transactions Leader, says:

“MENA IPO activity continues to defy global trends and remains a bright spot in a challenging market. The number and value of deals in the second quarter of this year confirms that investors still have an appetite for growth, yield and diversification. Several MENA listings from a range of sectors were oversubscribed, which is encouraging for companies looking to list during the second half of this year.”

United Arab Emirates sees its largest IPO listing to date

In the United Arab Emirates, the Dubai Electricity and Water Authority PJSC (DEWA) raised over US$6billion, becoming the biggest IPO in EMEA since 2019 and the largest IPO to date in the UAE. The order book was oversubscribed by37 times. Borouge plc, the second-largest IPO during H1 2022, raised US$2billion with an aggregate oversubscription of almost 42 times. TECOM Group raised US$454million and saw an oversubscription level of more than 21 times.

ADC Acquisition Corp PJSC became the first special purpose acquisition company (SPAC) to ever be listed in the MENA region, raising US$99.9millionwith its listing on the Abu Dhabi Securities Exchange (ADX). ADC was established by ADQ through its Alpha Oryx special purpose vehicle,and Chimera Investment as a SPAC for the purpose of identifying and acquiring one or more businesses.

Saudi Arabia leads in IPO volume with five IPOs

In Saudi Arabia, Saudi Home Loans Company was listed on the Tadawul during Q2 2022 and raised US$160million, with the bookbeing oversubscribed by 50 times. Retal Urban Development Company raised US$384million with its institutional order book being 62 times oversubscribed.

The Nomu-Parallel Market witnessed three IPOs during Q2 2022 which raised US$40.8million in total. The proceeds came from the listings of the Arabian Food & Dairy Factories Company, Ladun Investment Company, and Amwj International Company.

Six direct listings across the GCC in Q2 2022

There were also six direct listings reported in Q2 2022, with a total of 12 announced during the first half of the year.

Three direct listings took place on the Nomu-Parallel Market during Q2 2022. They were Naseej for Communication and Information Technology Company, Aqaseem Factory for Chemicals and Plastics Company and National Environmental Recycling Company.

Elsewhere, Ali Alghanim and Sons Automotive Company raised new capital of US$323million through a private placement before listing on Boursa Kuwait. The private placement was oversubscribed approximately 11 times.

On the ADX, GFH Financial Group BSC completed its fourth regional listing, with its shares already listed on the Bahrain Bourse, Boursa Kuwait and the Dubai Financial Market (DFM). In April 2022, the ADX rebranded its Second Market into the Growth Market,with the Invictus Investment Company becoming the thirteenth company to be listed on the Growth Market during Q2 2022.

Gregory Hughes, EY MENA IPO and Transaction Diligence Leader, says:

“The second quarter of 2022 continued the momentum of the first quarter, with Saudi Arabia and the UAE leading IPO activity in the MENA region. Despite concern from investors regarding the risk of a global recession, there remains a healthy pipeline of IPO candidates from KSA and the UAE, as well as quieter IPO markets such as Oman, Qatar, and Kuwait, looking to come to market in the future.”

“As part of their IPO readiness assessments, businesses are focusing even more on the impact of the changing regulatory environment, particularly around environment, social and governance (ESG) requirements. ESG will continue to be a key theme for investors and potential candidates. As the global climate continues to change and the constraint on energy supplies increases, companies that have embedded ESG into their core business values and operations should attract more investors and higher valuations.”

Global IPO market continues to slow down in Q2 2022

Globally,Q2 2022 saw a dramatic slowdown in IPO activity due to increasing market volatility, which led to the postponement of many IPOs. While most major markets experienced a fall in overall IPO activity, the Middle East and India both experienced a strong quarter.

Overall, the heightened volatility caused by geopolitical tensions and macroeconomic factors, declining valuation and poor post-IPO share price performance all led to significant drop in IPO activity from a record year in 2021.Global activity almost halved in H1 2022 when compared to H1 2021, with the Americas market seeing the biggest decline. However, the Asia-Pacific markets performed relatively better and benefitted from the two largest global IPOs in the year to date.