Muscat: Six initial public offerings (IPOs) were floated in the Middle East and North Africa (Mena) region during the second quarter of 2016, collectively raising $397.2million, a 40 per cent fall in volume and 81 per cent slump in value compared to the first quarter of 2016.
Phil Gandier, Mena Transaction Advisory Services Leader, EY, says: “Given the recent trends, Saudi Arabia and Egypt are the key Mena markets that are likely to see any IPO activity in Mena. Uncertainty in the global capital markets, driven by events such as the vote by the UK to exit the European Union and fluctuating oil prices, may result in future uncertainty in the Mena capital markets and the potential deferral of IPOs in the Mena region.”
Meanwhile, the UAE has circulated new draft IPO regulations for feedback from stakeholders, setting requirements increasingly in line with international exchanges.
Looking to Saudi Arabia, the Capital Market Authority has announced several major changes such as relaxing the requirements for foreign institutional investors, introducing new trading options, and the relaxation of reporting deadlines and the implementation of a new settlement process (T+0 to T+2) as Saudi Arabia works toward inclusion on the MSCI Emerging market index.
Saudi Arabia and Qatar have also announced plans to open a new exchange for small and medium-sized companies towards the end 2016 or beginning of 2017.
“Regulators in the Mena markets continue to implement new regulation to strengthen the capital markets and attract investment. Once the economic environment stabilises and general market sentiment improves, the backlog of IPO candidates will begin to emerge,”said Mayur Pau, Mena Growth Markets and Financial Services IPO Leader, EY.
“Looking historically at economic cycles, the right window of opportunity is often quite short, so it is crucial for companies who are looking to IPO to prepare well in advance. That way they can hit the market when the time is right,” he added.