Re­gional share of­fers touch 16 in the first half

The an­nounced value of cap­i­tal raised in the Mid­dle East and Africa re­gion touched $788 mil­lion in first half of 2017, re­flect­ing a 21% fall from the first half of 2016.

Times of Oman - - MARKET - Times News Ser­vice

MUSCAT: In the first half of 2017, IPO ac­tiv­ity in the Mid­dle East and North Africa (Mena) re­gion saw 16 deals, rep­re­sent­ing a 100 per cent in­crease from the first half of 2016.

The an­nounced Mena value, or cap­i­tal raised, touched $788 mil­lion in first half of 2017, re­flect­ing a 21 per cent de­crease from the first half of 2016.

The first half of 2017 was the most ac­tive first half of the year in terms of the num­ber of Ini­tial Pub­lic Of­fer­ings (IPOs) since the first half of 2007, ac­cord­ing to the lat­est re­port by Ernst and Young (E&Y). Out of the 16 IPOs, nine IPOs worth $200.5 mil­lion were from com­pa­nies listed on the Saudi Nomu mar­ket (par­al­lel mar­ket). The cross-bor­der IPO of ADES In­ter­na­tional Hold­ing raised $243.5 mil­lion on the Lon­don Stock Ex­change (LSE) and was the largest IPO by a Mena com­pany, in terms of cap­i­tal raised, year-to-date.

“In­creas­ing sta­bil­ity in oil prices and con­fi­dence in the global econ­omy and mar­kets are likely to drive an in­creased IPO ac­tiv­ity in 2017 and 2018 across Mena, with a strong back­log of com­pa­nies po­ten­tially pre­par­ing to come to mar­ket,” said Gre­gory Hughes, EY Mena’s IPO leader.

“The key driver for the Mena IPO mar­ket will likely be the pri­va­ti­za­tion of lead­ing gov­ern­men­towned as­sets across a num­ber of sec­tors,” he fur­ther added.

The green­field IPO of Ori­ent UNB Taka­ful (Ori­ent UNB) in sec­ond quar­ter of 2017 rep­re­sents the first IPO on the Dubai Fi­nan­cial Mar­ket (DFM) since the IPO of Dubai Parks and Re­sorts in 2014.

Num­ber of deals

The Gulf Co­op­er­a­tion Coun­cil (GCC) saw 13 IPOs raised in the first half of 2017, a 33 per cent in­crease in the num­ber of deals an­nounced for the same pe­riod last year.

How­ever, deal value de­clined by 6 per cent to $700 mil­lion in the first half of 2017, com­pared with the first half of 2016. Oil and gas sec­tor The high­est cap­i­tal raised in the first half of 2017 was in the oil and gas sec­tor with one deal an­nounced at a value of $243.5 mil­lion. The con­struc­tion in­dus­try fol­lowed with one deal val­ued at $135 mil­lion. The third most valu­able IPO by cap­i­tal raised was in the real es­tate in­vest­ment trust (REIT) sec­tor at $105 mil­lion for one deal.

In the first half of 2017, oil prices con­tin­ued to fluc­tu­ate be­tween $45 and $55 per bar­rel as the ini­tial ef­fect of agreed oil pro­duc­tion cuts by Opec (Or­gan­i­sa­tion of Petroleum Ex­port­ing Coun­tries) and non-Opec mem­bers con­tinue to be im­pacted by on­go­ing mar­ket fac­tors, re­sult­ing in a down­ward trend to­ward the end of sec­ond quar­ter 2017. How­ever, the con­tin­ued drive for pri­vati­sa­tion across MENA coun­tries is likely to re­sult in an in­crease in the num­ber of IPOs on exchanges.

“Global IPO ac­tiv­ity should con­tinue to strengthen in the sec­ond half of 2017, un­der­pinned by cap­i­tal mar­kets reach­ing all-time highs. In­vestor sen­ti­ment has im­proved and the global out­look is more pos­i­tive, which should re­flect in the IPO mar­ket in the Mena re­gion,” said Mayur Pau, Mena Fi­nan­cial Ser­vices IPO leader, EY.

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