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MENA Watch: IPO market shows strong investor confidence despite global slowdown

With 14 of the 19 offerings in Q4 2023, KSA confirmed its supremacy in the IPO market once more

The EY MENA (Middle East and North Africa) IPO Eye Q4 2023 report states that 48 initial public offers (IPOs) took place in MENA markets in 2023, raising a total of USD 10.7 billion. Of the overall IPO profits raised, five listings—mostly in the energy and logistics sectors—account for 58% of the total.

Nineteen IPOs raised USD 4.9 billion in cash in Q4 2023. The company that raised the most money, ADES Holding Company, provided 25% of the total proceeds from the IPO in the most recent quarter. Pure Health Holding PJSC came in second with 20%. The GCC accounted for all Q4 listing activity; Egypt was the only non-GCC nation to announce an IPO in 2023.

With 11 out of the 19 Q4 2023 IPOs seeing an increase in share price on the first day of trading, investor confidence in the region is still strong. By the end of 2023, 26 of the 48 initial public offerings (IPOs) had returned more than their listing price; Armah Sports Company had made the most gain, at 72%.

In comparison to 2022, there were 6% fewer initial public offerings (IPOs) and 51% fewer proceeds last year. Remarkably, 2022 had a large number of initial public offerings (IPOs), including those of Arabian Drilling Company, Saudi Aramco Base Oil Company, and Americana Restaurants International PLC (Americana). These IPOs contributed to the 2023 downturn.

The Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE) lead the way in terms of anticipated volumes among the 29 firms in the 2024 pipeline that have announced their desire to list. These companies are from a variety of sectors. Egypt plans four initial public offerings outside of the GCC.

“In 2023, there were a total of 48 IPOs raising USD 10.7 billion, of which five listed firms contributed 58% toward the total IPO proceeds generated, particularly in the energy and logistics industries,” says Brad Watson, EY MENA Strategy and Transactions Leader. With 11 out of the 19 Q4 2023 IPOs seeing a boost in share price on the first day, investor confidence in the area is still strong.

With the KSA and the UAE leading the way in terms of anticipated volumes, the 2024 pipeline consists of 29 businesses from a variety of industries that have announced their intention to list.

Saudi Arabia Continues To Dominate Listings

With 14 of the 19 offerings in Q4 2023, KSA confirmed its supremacy in the IPO market once more. With USD 1.2 billion in earnings, ADES Holding Company reported the largest profits, followed by USD 0.7 billion by SAL Saudi Logistics Services Company. The Tadawul Main Market listed both initial public offerings.

The remaining 12 initial public offerings (IPOs) raised a total of USD 140 million on the Nomu-Parallel Market, which also saw Almujtama Alraida Medical Co. become the only direct listing in the MENA area for the quarter. The top three industries in the nation for initial public offerings (IPOs) in 2023 were energy (36%), transportation (29%), and healthcare (10%).

Two Saudi listings on Tadawul in January 2024 marked the beginning of Q1 2024: MBC Group raised USD 222 million, while Avalon Pharma raised USD 437 million.

“The MENA IPO market delivered a healthy number of IPOs across several industries in 2023, despite the depressed global economic backdrop and the escalating geopolitical concerns in the Middle East,” says Gregory Hughes, EY’s leader for MENA IPOs and transaction diligence.

In 2023, several respectable and significant state-owned businesses went public, including OQ Gas Networks and Dubai Taxi Co.

Anticipatedly, 2024 got off to a good start with the MBC listing of Avalon Pharma and the announcement of many initial public offerings (IPOs) on the MENA markets, involving well-known private and state-owned companies.

Four New Postings Reported By The UAE

With three initial public offerings (IPOs) in Q42023, the Abu Dhabi Securities Exchange (ADX) raised a total of USD 1.8 billion. These were Phoenix Group PLC (valued at USD 371 million), Investcorp Capital plc (USD 451 million), and Pure Health Holding PJSC (USD 987 million).

With a 76% gain, Pure Health Holding PJSC posted the largest first-day gain. The transportation industry also saw the addition of a new listing on the Dubai Financial Market (DFM): Dubai Taxi Company PJSC, with a market value of USD 315 million.

The Largest IPO Ever Recorded In Oman

With USD 772 million raised, OQ Gas Networks SAOC’s IPO on the Muscat Stock Exchange (MSX) became the biggest in Oman to date. To expand its capital markets, the nation’s sovereign wealth fund, Oman Investment Authority (OIA), is getting ready to list state assets and conduct many initial public offerings (IPOs).

COP28 Gives Sustainability A New Lease On Life

The UAE played host to the 28th UN Climate Change Conference (COP28) in Q4 of 2023. To help businesses achieve their goals of decarbonisation and net-zero emissions, DFM unveiled a pilot platform for the trading of carbon credits during the global climate event.

This platform will enable firms to manage their residual and inevitable carbon emissions. To coincide with COP28, ADX also introduced the FTSE Russell ESG Screened Index. By giving investors access to a transparent and tradeable environmental, social, and corporate governance (ESG) benchmark, the index encourages sustainable business practices among ADX-listed businesses by ranking them according to their ESG ratings.

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