Saudi Arabia tops MENA countries in IPO, REIT activity in Q2

Countries in the Middle East and North Africa (MENA) region have raised $881.5 million through nine initial public offerings (IPOs), including four Real Estate Investment Trust (REIT) listings, during the second quarter of 2018, according to the latest EY MENA IPO Eye report.

Both IPO value and activity registered an increase of 42.8% and 12.5%, respectively in Q2-18, compared to the same period a year ago, Saudi Gazette said, citing the report.

Seven out of nine IPO deals in the MENA region were recorded in the GCC, with three REIT listings included, at a total value of $780.3 million.

Saudi Arabia led the IPO activity in MENA, with four out of nine IPOs being registered in Q2-18, part of an increasing trend of REITs being listed on the stock exchange and a reflection of the underlining investor interest in real estate assets in the oil-rich kingdom.

Saudi Gazette added that the highest offering value in Q2 was the Mefic REIT Fund IPO, listed on the Saudi Stock Exchange (Tadawul), which raised $237.5 million.

“The future inclusion of Saudi Arabia in the MSCI emerging markets index has drawn positive attention to the country, attracting investors from across the world. The country’s Capital Market Authority has brought in a mandatory corporate governance code, considerably relaxed rules for foreign investors, and raised settlement rules for the domestic Tadawul stock market toward global standards, which have all led to a favorable transacting environment,” MENA Transactions Leader at EY Phil Gandier said.

Following Saudi Arabia, Oman was the only other GCC country with IPO activity in Q2 as the Muscat Securities Market (MSM) recorded a single IPO at a value of $12.8 million.

“Looking to the future, the MSM has an IPO pipeline of over 10 companies that are expected to complete their listings in the next two to three years,” Saudi Gazette said.

At the level of MENA region, Egypt and Morocco recorded one deal each, the report found.

Egypt is currently witnessing a growing number of both government-owned and private companies looking to tap the equity markets through IPO. The government’s IPO programme plans to list 23 public sector companies on the Egyptian Stock Exchange (EGX), which is also in line with fiscal year 2018/2019 proposed budget.

“The real estate sector raised the highest capital, with four REITs raising $553 million, followed by $225 million raised in the oil and gas sector and $57.2 million in financial services,” Saudi Gazette reported.

MENA IPO Leader at EY Gregory Hughes said that despite the hike of oil prices, “MENA countries are still feeling the impact of the significant drop in oil prices in recent years. IPO activity was relatively slow in H1 2018, but activity is expected to pick up in H2 2018 and beyond owing to the strong upcoming IPO pipeline.”