Muscat: The Middle East and North Africa (Mena) region saw a record number of initial public offerings (IPOs) in 2022 with 51 IPOs combined raising $22 billion, according to a new report.
“The year witnessed a 143 per cent increase in the number of listings in 2022 when compared to the 21 announced in 2021, a 179 per cent hike in value when compared to last year, according to the EY Mena IPO Eye Q4 2022 report.
The strong run across the region’s markets included 20 IPOs in the fourth quarter of 2022 that raised $7.3 billion in proceeds. In terms of value, the second quarter of 2022 was the strongest quarter with $9.2 billion in proceeds raised across nine IPOs.
“Mena region IPOs had a stellar 2022, with interest and liquidity in the region continuing to defy global trends. The number of IPOs in the fourth quarter of 2022 was the highest at 20; however, the second quarter marked the highest proceeds with the listing of Dubai Electricity and Water Authority (DEWA) on the Dubai Financial Market (DFM) which raised a record $6.1 billion,” Brad Watson, EY MENA Strategy and Transactions Leader, said.
“The year to watch will be 2023 as there is a healthy IPO pipeline across the region against the backdrop of a challenging and volatile global economic environment,” he added.
Globally, 2022 saw a total of 1,333 IPOs raising $179.5 billion in proceeds, a 45 per cent decrease in volume and a 61 per cent decrease in value year-on-year. In contrast to the record-breaking 2021, IPO activity hit long-term lows by volume and value across several regions, with the strongest downward trend observed in the Americas, the EY Mena report said.
The Mena region, however, continues to buck the trend, with listings remaining strong until end-2022, and a positive outlook for 2023. Several companies have already announced their IPO plans for the new year.
Mena's equity performance experienced volatility throughout 2022 due to rising interest rates, inflation, and geopolitical unrest, which impacted investor sentiment. At the closing of the year, 24 out of the region’s 51 IPOs had a negative return compared to their IPO price.
Saudi Arabia increased listings
The Kingdom of Saudi Arabia (KSA) continued to dominate listing activity in the fourth quarter of 2022. This included seven IPOs on the Saudi Exchange (Tadawul) Main Market, raising $4.7 billion in proceeds, and six IPOs raising $65.2 million as well as two direct listings on the Nomu – Parallel Market. The largest public offering belonged to Saudi Aramco Base Oil Company (Luberef), which raised $1.3 billion – an amount that alone exceeded the total value of Saudi listings for the third quarter of 2022.
Meanwhile, Americana Restaurants International PLC (Americana) brought a first-time dual offering and concurrent IPO on Abu Dhabi Securities Exchange (ADX) and the Tadawul. In total, the company offered 30 per cent of the equity to raise $1.8 billion.
United Arab Emirates
In the United Arab Emirates (UAE), DEWA raised $6.1 billion in the second quarter of 2022, becoming the largest Mena IPO for the year in terms of proceeds raised.
In the fourth quarter of 2022, ADX welcomed three listings – Americana, Burjeel Holdings, and Bayanat AI, which raised a total of $14.0 billion. Furthermore, there were two new listings on DFM – Emirates Central Cooling Systems Corporation (Empower), raising $724.1 million, and Taaleem Holdings with $204.2 million.
IPO activity in wider region
Despite a lower number of IPOs and trading volumes, the Egyptian Exchange (EGX) outperformed the largest GCC markets – Tadawul and ADX – in 2022 with an annual gain of 22.2 per cent.
The fourth quarter of 2022 saw an increase in IPO activity across the wider Mena region with smaller listings in Oman, Morocco, and Tunisia. The IPO of Pearl Real Estate Investment Fund (Pearl REIF) raised $60.7 million on the Muscat Stock Exchange (MSX), Akdital Holding S.A. raised $75.6 million on the Casablanca Stock Exchange, and Assurances Maghrebia Vie raised $14.6 million on the Tunis Stock Exchange.
“The year 2022 marked a record year for Mena IPOs with a year-on-year growth of 179 per cent in total proceeds raised from both state-owned and private companies. The region is coming together with the recent first-time regional dual listing and concurrent IPO of Americana Restaurants on ADX and Tadawul and announced collaborations with regional and international exchanges, as well as a unified set of ESG Disclosure Metrics by the GCC Exchanges Committee,” Gregory Hughes, EY Mena IPO and Transaction Diligence Leader, said.
“The question remains whether the global economic outlook and lower gross domestic product (GDP) forecasts for the MENA region will impact expected listings for 2023 despite the pipeline of large government-backed and private company IPOs,” he further added.