EY expects IPO activity in Mena region to increase

Initial public offerings are expected to pick up in the fourth quarter of the year and in 2020 in the Middle and North Africa region, after there were only two listings in a quiet third quarter in Saudi Arabia and Egypt, according to the latest report from Ernst & Young.

“IPO listings in the Mena region may have slowed down during the third quarter of this year versus the prior year, but there remains a strong pipeline of companies finalising the details of their listing for a launch in the next 12 months both regionally and internationally,” said Gregory Hughes, Mena IPO leader at EY.

Saudi Aramco is expected to be listed by the end of the year on the Saudi stock exchange.

There were two IPOs in the third quarter, including Fawry – a banking technology and electronic payments company in Egypt – and Ataa Educational Company in Saudi Arabia with a total value of $190 million (Dh697.7m), down from $347.3m in the third quarter of last year.

Fawry’s listing was the first IPO of a private company on the Egyptian Stock Exchange since Sarwa Capital in October 2018 and was oversubscribed 30.3 times.

“The current economic boost in Egypt has been hailed by investors since the country registered a growth of 5.6 per cent, the highest economic growth since June 2010. Furthermore, inflation eased in August and reached its lowest rate since 2013,” the report said.

In Saudi Arabia, Ataa Educational Company, one of the kingdom’s biggest private school operators, raised $93m with its listing – the fourth listing in Riyadh this year.

GCC countries are also updating regulations to attract foreign investors with the Securities and Commodities Authority of the UAE planning a host of measures to help boost investor confidence, according to the report.

These include setting up a platform for unprofitable companies and mandating at least one female member on the board of listed companies, among others.

Oman is also planning to implement a new regulation where there will be no upper capital limit for foreign investors. The framework is expected to come into effect from January.

Global IPO activity was also relatively slow during the third quarter compared to 2018 with the total number of deals as well as proceeds down 24 per cent and 22 per cent, respectively.

Globally, there were 256 IPOs in the third quarter worth $40.2bn. Technology, health care and industries remained the top three sectors by the number of IPOs issued.