Saturday 06 / July / 2024
Muscat: The Middle East and North Africa (Mena) region saw four initial public offerings (IPOs) raised total proceeds of $1.836 billion during the third quarter (Q3) 2021, a 1,483 per cent increase in value in the same quarter in 2020, a new report said.
“The number of IPOs increased from one in Q3 2020, representing a 300 per cent surge. The year-to-date total number of IPOs stands at eight in the Mena region so far this year, with a combined value of $2.261 billion. Direct listings continued their momentum with seven such listings occurring during Q3 2021, Ernst and Young (EY) said in its latest report.
The four IPOs in Q3 2021 were Al Yah Satellite Communications Company (Yahsat), Tanmiah Food Company (Tanmiah), Mataam Bayt AlShatira Lilwajbat Alsariya Company (Burgerizzr) and Arabian Internet and Communications Services Company (Solutions by stc).
The Yahsat listing is the first IPO to occur on the Abu Dhabi Securities Exchange (ADX) since 2017, raising $730.6 million by offering 40 per cent of its shares. The offering was oversubscribed multiple times, with Mubadala continuing to retain a circa 60 per cent shareholding in the company.
Equity markets have also had an exceptional year so far, with the ADX continuing to be the top performer with a year-to-date (YTD) return of 52.6 per cent. Saudi Arabia’s Tadawul is the second-best performing Mena market with a YTD return of 32.3 per cent.
Widespread regulatory changes
The third quarter of 2021 saw a series of notable regulatory changes with Qatar amending its Commercial Companies Law, while the ADX and Dubai Financial Market (DFM) extended their trading hours and waived the minimum commission fee on trades for all listed securities. The Capital Market Authority of Saudi Arabia approved three IPOs and one direct listing on the Nomu–Parallel Market. In addition, three IPOs on the main market received approvals.
“During Q3 2021, the number of IPOs increased 300 per cent as compared to Q3 2020, when there was only one IPO on the Mena markets, with proceeds increasing 1,483 per cent compared to Q3 2020. This brings the total number of IPOs YTD in 2021 to eight, with total proceeds of $2.3 billion,” Matthew Benson, EY Mena Strategy and Transactions Leader, said.
“As Mena economies rebound from the pandemic and oil prices remain favourable, companies with strong fundamentals continue to receive ample investor interest and the pipeline of IPO candidates is ever increasing. At EY, we continue to work closely with MENA companies to support them on this transformational journey to go public, which starts many months and often years ahead of their IPO journey,” he added.
Saudi Arabia lists 3 IPOs
During Q3 2021, Saudi Arabia once again led activity in the IPO market within the region. In August 2021, Tanmiah listed on the Tadawul, raising $107.2 million by offering 30 per cent of its shares. Burgerizzr also concluded its IPO on the Nomu–Parallel Market and raised $31.8 million. Solutions by stc, a unit of the Saudi Telecoms Company, raised $966.4 million in its IPO on the Tadawul.
ADX lists its first IPO in four years
The ADX officially ended its four-year IPO drought with the listing of Yahsat in Q3 2021, followed by the listing of ADNOC Drilling and Fertiglobe during Q4 2021. Other listings in the pipeline include Emirates Global Aluminium and Abu Dhabi Ports.
Kuwait: New ESG guidelines
Boursa Kuwait launched its new ESG guide to raise awareness for Corporate Sustainability in the Kuwaiti capital market in Q3 2021. The guide aims to introduce the ESG fundamentals to companies listed on the stock exchange and highlight the benefits of ESG disclosure and best practices.
The new guide proposes an initial set of sustainability indicators that correspond with the UN’s Sustainable Development Goals (SDGs), the Global Reporting Initiative (GRI) framework and the State of Kuwait’s sustainable development ambitions as set out in the Kuwait National Development Plan and the “New Kuwait” vision for 2035. It is also aligned with the recommendations of the World Federation of Exchanges (WFE) and the Sustainable Stock Exchanges (SSE) initiative.
“The Mena IPO market activity has picked up in Q3 2021 with four listings raising a total of $1.8 billion in proceeds. Saudi Arabia and Abu Dhabi are leading the IPO activity and continue to have a strong pipeline for the coming quarters, while activity in Dubai continues to lag,” Gregory Hughes, EY Mena IPO and Transaction Diligence Leader, said.
“We have also seen the re-emergence of larger IPOs, which have been met with solid investor interest, further demonstrating the ample liquidity that is currently available in the market. Around the world, however, we are seeing IPOs being pulled or delayed in multiple markets due to the large number of offerings looking for investment, so we need to remain vigilant in this region as the pipeline grows,” he added.
