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 government-owned 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.
Volume 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.