The Middle East and North Africa (Mena) initial public offering market continued its recovery to end the first half of the year strongly, according to Ernst and Young’s Mena IPO update for the second quarter.
There were a total 16 deals, including the two of power companies Al Batinah and Al Suwaidi in Oman, raising $2.4 billion in the first six months. There was an increase of 14 per cent for both volume and proceeds compared to the same period last year.
It was also the highest amount of capital raised in the first half since 2008. In second quarter alone, there were 11 IPOs raising $1.1 billion, a 129 per cent increase on the previous quarter and a rise of 22 per cent compared to the second quarter of last year by deal numbers.
The Gulf Co-operation Council (GCC) IPOs represented 90 per cent of all Mena IPOs in the first half, with 10 of them raising $2.26 billion. Saudi Arabia led the GCC activity in the first half of the year with four IPOs, followed by the UAE three, Oman two and Qatar one.
Ernst and Young Mena transactions leader Phil Gandier said: “The IPO market is very strong across Mena, particularly among the GCC countries which continue to attract large IPOs and drive the strong performance in the region. In the first half of the year, the majority of IPO deals were in the second quarter, which is a good indication for a positive second half of the year. All the IPOs executed were within the regional market which shows a shift from the trend of international listings in the last few quarters. The combination of improved liquidity and reasonable valuations will continue to drive the IPO activity in the region.”
Qatar’s Mesaieed Petrochemical Holding Company launched the region’s largest issue, raising $903 million in January. Saudi Arabia and Tunisia had the highest number of IPOs with four each.
Activity was spread broadly across sectors, with IPOs in the healthcare, power and utilities, retail, construction, oil and gas, telecommunications, leisure and tourism and industrial manufacturing sectors.
The Mena stock markets continued the upward momentum, remaining attractive with average price-to-earnings (PE) of 13.9 at the end of June 2014. The number of IPO-focused funds in the region could be on the rise with more IPOs in the next two years. Currently, there are only a handful of IPO-focused funds in Mena, the EY update says.
“In the second half, we expect the Mena IPO market to remain buoyant with the fundamentals in place for a sustained period of strong and steady IPO activity,” Phil added.
