MENA Q1 IPO value increases 57pc

In the first quarter of 2018, six deals in MENA region raised $629.6 million, a 57.1 per cent increase in value when compared to Q1 2017. Of the six deals, five were Real Estate Investment Trusts (REIT) in KSA, while Egypt recorded one IPO deal in the financial services sector. In terms of activity, it was a slow start to the year, with a 45.5 per cent decrease in the number of deals when compared to the same quarter last year.
Mayur Pau, MENA Financial Services IPO Leader, EY, says: “IPO activity was relatively slow in the first quarter, though it is expected to pick up during the last two quarters of this year. The increase in deal value year-on-year indicates that the IPO market performance is strong. The most important impetus for the regional IPO market will likely be from the privatisation drive across the region leading to the listing of government or quasi-government enterprises.”
Saudi Arabia led the MENA IPO activity in Q1 2018 with five deals, raising $603.2 million in capital. The top three IPOs by value were listed on Tadawul: SEDCO Capital REIT, Jadwa REIT Saudi, and Al Rajhi REIT. The biggest MENA IPO of the quarter was the listing by SEDCO Capital, valued at $173.3 million.
The increasing trend of REITs being listed on the exchange is indicative of the growing investor interest in the Kingdom’s real estate assets. The Saudi stock market index also gained more than 9 per cent in the first quarter, outpacing many other emerging market indices. The recent upgrade of Saudi Arabia to emerging market (EM) status by FTSE is expected to pump billions of dollars of foreign investment into the MENA region’s biggest stock exchange. A similar move from MSCI is expected in June 2018, making way for Saudi Arabia to gain another possible EM status upgrade in 2019.
Furthermore, the Saudi Capital Market Authority (CMA) has allowed direct investments by non-resident foreign investors on Saudi’s parallel market NOMU, effective from January 1, 2018.