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IPO activity in the Middle East and North Africa region remained strong despite weak global market sentiment, with 10 IPOs raising net proceeds of US$3.4 billion in the first quarter. However, according to the EY Mena IPO Eye Q1 2023 report, compared to Q1 2022, listings fell by 33% in number and 14% in value.
Globally, there were 299 IPOs raising US$21.5 billion in Q1 2023, a 61% year-on-year decrease. This follows a trend in 2022, when IPO-bound companies and investors face continued macroeconomic and geopolitical uncertainty, exacerbated by strains in the global banking system. IPO windows are short, funding conditions are getting tougher, and investors are prioritizing value over growth.
However, the MENA region remains buoyant with a positive outlook for the remainder of the year, driven by various supportive initiatives such as the Abu Dhabi IPO Fund (ADIPOF). Six companies from the Kingdom of Saudi Arabia (KSA) have announced plans to list on the main market of the Saudi Stock Exchange (Tadawul).
These include Ghida Al-Sultan Company, Foods Gate, Meyar Construction Co, Saudi Lime Industries Company, First Mills Company and HyperPay.
positive return
The volatility experienced by MENA equities in 2022 has continued into the first quarter of 2023 as rising interest rates, inflation concerns, unexpected global banking turmoil and geopolitical uncertainty weigh on investor sentiment. At the end of the quarter, 6 out of 10 MENA IPOs had positive returns relative to their IPO prices, led by Presight Al Holding PLC which had the highest gain of 146.3%.
Brad Watson, Head of Strategy and Transactions at EY Mena, said: “Q1 2023 proves that in these uncertain economic times, Mena IPOs continue to buck global trends, building on last year’s momentum. 2023 shows pipeline across the region Healthy, with multiple initiatives supporting the IPO path for private and government entities.”
Saudi Arabia continues to lead
Saudi Arabia is once again the frontrunner for listing activity in Q1 2023. This includes 6 IPOs on Nomu – Parallel Market, which raised $700 million, and a real estate investment trust (REIT) that raised $100 million. The IPOs came from a range of companies across industries, including Leen Alkhair Trading Co, Horizon Foods Co, Nofoth Food Products Co, Waja Co, BENA Steel Industries Co, Knowledge Net Co and Alinma Hospitality REIT Fund. Balady Poultry Co and Alqemam for Computer Systems Co also have two direct listings on Nomu.
UAE sees world’s largest IPO this quarter
In the UAE, the Abu Dhabi Securities Exchange (ADX) had the world’s largest initial public offering of the quarter, with Adnoc Gas PLC raising $2.5 billion.
The IPO was 58 times oversubscribed, with shares trading 19 percent above the listing price of AED 2.37 ($0.65) on the first day of trading. This is the sixth company to list for Adnoc Group, which continues the trend until 2023 with further announcements.
Also, ADX-listed data analytics company Presight AI Holding PLC raised $500 million in its second IPO from the G42 portfolio, which was 136 times oversubscribed.
Wider region witnesses tepid IPO activity
Other regional exchanges are also conducting IPO activity in the first quarter of 2023. The IPO of Abraj Energy Services SAOG, Oman’s largest oilfield services provider, raised US$200 million on the Muscat Stock Exchange (MSX) and was 8.7 times oversubscribed. In addition, the Qatar Stock Exchange (QSE) welcomed the direct listing of Daman Islamic Insurance Company.
Despite the continued depreciation of the Egyptian pound, the Egyptian stock market (EGX30) ended the quarter with a gain of 12.5%, cementing its position as the best performer in the Middle East.
Gregory Hughes, Head of IPO and Deal Due Diligence at EY Mena, said: “Despite a 33% year-on-year decline in the number of IPOs in Q1 2023, Mena IPO and deal activity remains strong, a testament to investor confidence in the region’s ability to weather global financial headwinds. . Saudi Arabia remains the most active market in terms of deal volume, while the largest IPOs continue to be dominated by the energy sector. The second quarter of 2023 is already off to a good start with listings announced in many jurisdictions.”
The UAE has already witnessed its first IPO in the second quarter of 2023, with Al Ansari Exchange listing on the Dubai Financial Market (DFM) on April 6, 2023, raising US$200 million. In addition, Adnoc has announced a second listing this year, planning to sell a 15% stake in its logistics and transport unit in an IPO. Elsewhere in the region, Qatar-based technology services provider MEEZA is also on track to list in the second quarter, becoming the first company in the country to use a book-building mechanism to set its IPO price. — trade arab news agency
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