MENA IPO market remains muted in H1 2021

Muscat: IPO markets in the Middle East and North Africa (MENA) sawno more than four IPOs during H1 2021, with total proceeds of $425.8m, down by 48 per cent compared with H1 2020, multinational professional services network EY stated in its latest report.

The number of IPOs stayed the same y–o–y, although there were a number of direct listings during the period, it noted.

In Q2 2021, the only IPO in the MENA region was TaaleemManagement Services, which listed on the Egyptian Exchange (EGX) and raised 131.0m in proceeds. This is a slight improvement compared to this time in Q2 2020 when there were no public offerings as the COVID–19 pandemic shook the world and left a continuing trail of uncertainty, said EY.

Taaleem Management Services, a higher education platform that controls and operates Nahda University in Beni Suef (NUB), the largest private university in Upper Egypt, sold 49 per cent of its shares on the EGX. The institutional offering was oversubscribed 2.34 times, while the retail offering was oversubscribed 29.38 times. This is the first IPO in Egypt since the listing of Tenth of Ramadan for Pharmaceutical Industries and Diagnostic Reagents (Rameda) in Q4 2019.

The EGX also welcomed the technical dual listing of Integrated Diagnostics Holdings (IDH) which was concluded on the EGX on 20 May 2021. IDH has been listed on the LSE since 2015 and is the first company to conduct a technical dual listing on the EGX.

Other listings for Q2 2021 included the direct listing of Alpha Dhabi Holding (ADH), an IHC subsidiary, on the ADX main market with a market capitalization of $40.8b. Emirates Stallion became the fourth IHC Group company to list on the ADX second market with a market capitalization of $254m. This follows the 2020 listings of Palm Sports, EasyLease and Zee Stores.

The Qatar Exchange Venture Market Program (QEVM), an alternative venue for listing and trading of shares for SMEs, saw its debut listing with the Al Faleh Educational Holding. direct listing of 240 million ordinary shares.

Although there were no IPOs in Saudi Arabia during Q2 2021, the Capital Market Authority (CMA) has issued approvals for several IPOs on Tadawul, namely Tanmiah Food Company, Arabian Internet and Communications Services Company, Arabian Contracting Services Company (ACC) and International Company for Water and Power Projects (ACWA Power). These transactions are expected to be completed before the end of 2021 and will give a strong boost to the MENA IPO market figures for 2021.

The Nomu–Parallel Market saw the direct listings of Fesh FashSnack Food Production Company and Mohammed Hasan AlNaqool Sons Co. during Q2 2021. Burgerizzr received approval for its IPO on Nomu from the CMA with the listing expected to occur in Q3 2021.

“The MENA region’s IPO market did not witness a pickup in activity during Q2 2021 as expected, with only one IPO occurring on the EGX, while direct listings continued their momentum with six listings across several MENA countries,” said Matthew Benson, EY MENA Strategy and Transactions Leader.

“Compared to H1 2020 though the number of IPOs remained at four during H1 2021, total proceeds raised decreased by 48 per cet. Preparations are ongoing for several key transactions that are expected to occur during H2 2021, particularly with the UAE and Saudi Arabia demonstrating a strong pipeline of IPO candidates. Our outlook on the region’s IPO activity remains positive, taking into account the continued improvement in economic conditions and stability in the region, coupled with the strong performance of oil prices we have seen thus far in 2021.”

Although IPO activity during H1 2021 was below expectations, the year did bring some remarkable deals with MENA companies showing an ever increasing interest in special purpose acquisition company (SPAC) transactions as a means to go public, commented Gregory Hughes, EY MENA IPO Leader.

“We expect this trend to continue as companies seek to increase their international presence and gain access to a wider pool of investors. Positive equity market performances across the MENA region offer a favourable backdrop for IPO candidates looking to list their shares and the IPO outlook is favourable for MENA companies who now have a variety of options when it comes to the routes available to them to access the capital markets,” Hughes added.