MENA stock markets maintain IPO momentum, raises $1.8bn in Q2 2023

Middle East companies raised $1.8bn in proceeds from 13 initial public offerings (IPOs) in the second quarter of 2023, a 44 per cent increase in the number of listings but an 80 per cent drop in proceeds compared to a year ago, according to consulting firm EY.

The momentum in Q2 2023 was driven predominately by Saudi Arabia and the UAE.

The kingdom dominated MENA IPO activity in terms of the number of listings, with four listings on the Saudi Exchange’s (Tadawul) main market raising $0.8bn. Similarly, seven IPOs on Tadawul’s Nomu parallel market raise $0.1bn in proceeds.

Jamjoom Pharmaceuticals Factory Company raised $336m, the highest raise on the Tadawul for the quarter, followed by First Milling Company which raised $266.4m.

“Both offered a free float of 30 per cent of the company’s share capital and were oversubscribed,” said EY.

ADNOC L&S drew orders worth $125bn for its $769m IPO on the Abu Dhabi Securities Exchange (ADX) – the largest listing for the quarter. EY said ADNOC L&S’ IPO saw the largest demand globally for a transaction so far in 2023, with an oversubscription level of 163x in aggregate – the highest oversubscription for a UAE book-build IPO.

Money exchange and remittance firm Al Ansari Financial Services is one of the first family-owned businesses to go public in the UAE after the company soared as much as 20 per cent in its trading debut on the Dubai Financial Markets.

The Al Ansari family sold 750 million shares in the offering, equivalent to 10 per cent of the company’s paid-up capital, to raise $210m.

“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,” said Brad Watson, EY MENA Strategy and Transactions Leader.

“So far, 23 Saudi companies have announced their listing plans on the Tadawul for H2 2023. Further afield, two companies in Egypt intend to list, indicating a strong pipeline of IPOs to come in the remainder of the year.”

Meanwhile, overall, MENA IPO activity registered a total of 23 public offerings (a 4 per cent year-on-year decrease), all of which were in the GCC with total proceeds of $5.2bn.

GCC IPO pipeline

Meanwhile, the GCC region has undergone critical structural reforms over the past years as governments seek to diversify their finances away from heavy reliance on hydrocarbons and attract foreign investment.

The glut of public offerings is attracting growing interest from global banking groups that have strengthened their teams in the region in a bid to take more share of the IPO boom as listings have dwindled in London, Hong Kong and New York.

Citigroup received a number of requests for proposals for offerings as the Gulf region continues its run as a hot spot for share sales, Rudy Saadi, head of Middle East and North Africa equity capital markets, said in an interview with Bloomberg TV. The strong IPO pipeline is already building for 2024.

Earlier in August, Dubai’s Roads & Transport Authority reportedly picked Citigroup, Bank of America and Emirates NBD Capital to work on the planned IPO of the city’s taxi business, in what is expected to be the emirate’s first privatisation of the year.

Read: GCC stock markets are hitting record highs. Here’s why