The IPO (initial public offerings) activity in the Mena (Middle East and North Africa) region gathered momentum with as many as 13 maiden offers raising a total of $1.8bn in the second quarter (Q2) of 2023, according to Ernst and Young (E&Y).
“The Q2 of 2023 confirmed that Mena IPOs are not experiencing the downward trend witnessed globally. The UAE and Saudi Arabia continue to be the most active markets in the Mena region in terms of both the number and size of IPOs," said Brad Watson, EY Mena Strategy and Transactions Leader.
Adnoc’s second portfolio company listing in 2023 outpaced the global markets in terms of demand, it said, adding the Mena region continues to have strong economies and low debt; coupled with the reform and deregulation in the region, it continues to be an attractive environment for new listings.
Overall, in the first half (H1) of 2023 the Mena IPO market registered a total of 23 IPOs (4% year-on-year decrease), all of which were in the Gulf Co-operation Council with total proceeds of $5.2bn.
While the general EMEIA region continues to see a significant contraction in IPO values, the Mena region has a promising pipeline for the rest of the year, particularly from Saudi Arabia, EY said.
So far, 23 Saudi companies have announced their listing plans on the Tadawul for the second half of 2023. Further afield, two companies in Egypt intend to list, indicating a strong pipeline of IPOs to come in the remainder of the year.
The Mena IPO pipeline for H2 2023 and 2024 remains very healthy with several IPOs already announced in Saudi Arabia and multiple processes ongoing across the broader region, with further transactions planned in the UAE, Oman, Qatar, and Kuwait, according to Gregory Hughes, EY Mena IPO and Transaction Diligence Leader.
"We see planned IPO activity across different sectors and from a combination of family business, state-backed enterprise and private equity stakeholders. Mena has been a bright spot in the much more subdued global IPO market, and we expect this to continue in the future, especially with international businesses also exploring listings in this region,” he said.
EY analysis shows that the global economic picture in H1 2023 was impacted by volatility in Opec and Brent crude prices, which rose in January and February 2023 before falling sharply around mid-March 2023.
The rise in January was due to the stronger-than-expected growth in China's economy, which boosted demand for oil. The fall in March led to concerns about a global recession and expectations of higher interest rates.
Oil prices rebounded in April 2023 as the financial market stabilized and expectations of higher interest rates eased. Opec+ announced production cuts in early April, which provided further support to prices.
Crude oil prices witnessed relatively lesser volatility in June with prices settling at lower levels of $71 per barrel to $77 as concerns on the global economy weighed on demand. However, further production cuts by Opec+ and Saudi Arabia are expected to support prices in the coming months.
