EY: Egypt is only MENA Market to issue IPOs in Q1 2015
Both of the IPOs that concluded in Q1 2015 were companies based in Egypt, with Orascom Construction opting for a dual listing on the Egyptian Stock Exchange (SE) and Nasdaq Dubai.
Initial public offering (IPO) activity in the Middle East and North Africa (MENA) declined in Q1 2015 after an active Q4 2014, with only two IPOs across the region collectively raising $255.7 million.
Capital raised by MENA firms through IPOs decreased by 80 per cent and the number of IPOs decreased by 60 per cent in Q1 2015, compared with Q1 2014. Similarly, capital raised by MENA firms through IPOs decreased by 97 per cent and the number of IPOs decreased by 75 per cent in Q1 2015, compared with Q4 2014.
Phil Gandier, MENA transaction advisory services leader at Ernst & Young (EY), says: “The MENA IPO market is expected to be cautious given the recent volatility levels in oil prices and the MENA capital markets. Regional companies are expected to wait and watch the markets closely for the oil price to settle down before launching new IPOs in Q2 2015 and Q3 2015. While there may be some adjustments to government spending plans, the regional markets are expected to stabilise over the rest of the year, with the fundamentals in place for a sustained period of steady IPO activity.”
Both of the IPOs that closed in Q1 2015 were companies based in Egypt, with Orascom Construction opting for a dual listing on the Egyptian Stock Exchange (SE) and Nasdaq Dubai.
The growing investor confidence was reflected in the IPO market with both Orascom Construction and Orascom Hotels and Development being oversubscribed by 5.1 times and 3.8 times respectively.
Mayur Pau, MENA IPO leader, EY, says: “The ongoing economic recovery and increasing stability in Egypt have encouraged capital market activity. Egypt was the only market to see IPO activity in Q1 2015. This is supported by government initiatives to stimulate the economy, including a cut in energy subsidies last year, an improved tax regime and new infrastructure projects such as the Suez Canal development project.
“Improving relationships with other countries in the region have resulted in several Gulf countries collectively pledging $12 billion for the economic recovery and growth plans of the country. These factors, combined with more simplified listing procedures and amended laws, are likely to drive an increase in capital market activity on the Egyptian SE.”
Regional markets, particularly Saudi Arabia and Egypt, are encouraging increased capital inflow from foreign investors by proposing and implementing further regulatory reforms.
Source: Khaleej Times
