The MENA region saw four IPOs raise total proceeds of US$1.836b during Q3 2021 – a 1,483 per cent increase in value on the same quarter in 2020.
According to EY’s MENA IPO Eye Q3 2021 report, 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 $2.261b. Direct listings continued their momentum with seven such listings occurring during Q3 2021.
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 $730.6m 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 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.
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.
Matthew Benson, EY MENA Strategy and Transactions Leader, says: “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. As MENA economies rebound from the pandemic and oil prices remain favorable, 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.” Oman’s economy, according to the latest IMF report, is set to recover in 2021, with non-hydrocarbon GDP growth of 1.5 per cent as the vaccine rollout gradually restores domestic activity, alongside the recovery of external demand. Oil production in Oman is projected to increase after the current OPEC+ agreement expires in April 2022, while inflation in Oman has been subdued.
Gregory Hughes, EY MENA IPO and Transaction Diligence Leader, says: “The MENA IPO market activity has picked up in Q3 2021 with four listings raising a total of $1.8 billion in proceeds. KSA 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. 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.” Notably, the ESG context is rapidly evolving globally across the MENA region – and MENA policy is broadly keeping pace with investor sentiment. Institutional investors are raising the stakes when it comes to assessing company performance using ESG factors. Right across the region, Q3 saw a flurry of announcements relating to new ESG mandates.
