Value of Mena stock market listings trebles in second quarter

The amount of money raised by companies from the Middle East and North Africa in the second quarter via stock market listings more than trebled when compared to the same period a year earlier, according to a new report.

Big Four accountancy firm EY's Mena IPO Eye report stated that the value of initial public offerings (IPOs) completed in the three months to June reached $2.82 billion (Dh10.36bn), a 222.6 per cent year-on-year increase, even though the number of new listings fell by one-third to six.

“The increase in IPO activity across the Mena region during the second quarter of this year, which included two cross-border listings, is proof that companies are still keen to execute IPOs and gain access to international investors and stock markets," said Gregory Hughes, Mena IPO leader for the firm.

"The IPO deal value raised in the first half of 2019 has already nearly surpassed the total deal value raised in 2018,” he added.

The half-year total for 2019 was $2.88bn, with just one listing - the $57.6 million IPO of Al Moammar Information Systems Company in Saudi Arabia taking place in the first quarter. The total amount raised by Mena firms throughout 2018 stood at $2.95bn.

The biggest IPO to take place in Q2 - equating to about half of the total raised - was the $1.4bn listing of UAE-based card payments processor Network International on the London Stock Exchange in April. The biggest IPO to take place on a local exchange was the $658.7m listing of Saudi Arabian shopping centres company Arabian Centres in May.

Other major listings during the quarter included the $397.9m listing of UAE payments company Finablr, which also took place on the London stock exchange, and the $207m IPO of Maharah Human Resources Company on Tadawul.

“Across the Mena region, IPO activity is expected to progress cautiously, with an optimistic outlook owing to events and themes such as the MSCI and FTSE inclusions, privatisation drives and government initiatives,” Mr Gregory said.

One such initiative highlighted in the report is a series of proposed amendments published by the UAE's Securities and Commodities Authority that would facilitate onshore listings on UAE markets for Free Zone companies, subject to certain conditions.

It also pointed to recent changes to Oman's Commercial Companies Law, which contained measures relating to the listing of new companies, sukuk and debt funds with a view to making the country's capital market robust, and to the Egyptian government's ongoing plan to list stakes in publicly-owned companies on the Egyptian Exchange.

Speaking in Dubai on Sunday, the chairman of Daman Investments, Shehab Gargash, said there was always a steady pipeline of companies looking to list on public markets.

"Even in the darkest hours, there are always people who are prepared and waiting to move," he said.

However, he also described recent decisions by a number of companies to list on the London Stock Exchange and elsewhere in Europe as "troubling".

"If you ask me, the liquidity generated by these companies listing locally is far superior to the liquidity they can generate by listing on the AIM (London's Alternative Investment Market) or similar European markets. However, they have decided that the credibility of the market is not to the point where they are comfortable listing on it," Mr Gargash said.

"We need to raise the bar on the credibility of the local market, and that will solve the issue of how many companies actually do head to list in this market," he added.