DOHA: The Mena IPO market continued its recovery to end the first half of the year 2014 (H1, 14) strongly.
There were a total of 16 deals raising $2.4bn in the first six months of the year, an increase of 14 percent for both volume and proceeds on the same period in 2013 and the highest amount of capital raised in the first half since 2008. In Q2, 2014, there were 11 IPOs raising $1.1bn, a 129 percent increase on the previous quarter and a rise of 22 percent compared to Q2 2013 by deal numbers, EY’s ‘Mena IPO update: Q2, 2014’ noted yesterday.
Qatar’s Mesaieed Petrochemical Holding Company (MPHC) launched the region’s largest issue in the first half, raising $903m in January 2014. Saudi Arabia and Tunisia had the highest number of IPOs with four each across the first half of the year. The fundamentals of the Saudi economy along with the increased appetite for equities and improved valuation have contributed to a better IPO performance in Saudi.
GCC IPOs represented 90 percent of all Mena IPOs in H1, with 10 GCC IPOs raising $2.26bn which was 67 percent and 14 percent higher than H1, 2013. Saudi Arabia led the GCC activity in the first half of the year with four IPOs, followed by the UAE with three, Oman with two and Qatar with one.
Phil Gandier, Mena Transactions Leader, EY, said: “The IPO market is very strong across Mena, particularly among the GCC countries which continue to attract large IPOs and drive the strong performance in the region. In the first half of the year, the majority of IPO deals were in Q2, which is a good indication for a positive second half of the year. All the IPOs executed in Q2, 2014 were within the regional market which shows a shift from the trend of international listings in the last few quarters. The combination of improved liquidity and reasonable valuations will continue to drive the IPO activity in the region.”
“The regional IPO market has seen some notable developments in terms of new deals. Emirates REIT Ltd was the first listing with a capital raise since 2008 on Nasdaq Dubai and Marka was the first IPO on DFM since 2009. The upgrading of the UAE to emerging markets status in May 2014 will go a long way towards changing investors’ perceptions and will help to boost the long-term prospects of the market,” said Mayur Pau, Mena IPO Leader, EY.
Activity was spread broadly across sectors in H1, with IPOs in the healthcare, power and utilities, retail, construction, oil and gas, telecommunications, leisure and tourism and industrial manufacturing sectors. The Mena stock markets have continued the upward momentum from 2013 this year, remaining attractive with average price-to-earnings (PE) of 13.9 at the end of June 2014. The stock exchanges of Kuwait, Morocco and Saudi Arabia had the higher PE ratios.
The number of IPO focused funds in Mena could be on the rise with more IPOs set to enter Mena markets in the next two years, which could bring in greater investment and IPO opportunities. Currently, there are only a handful of IPO-focused funds in Mena. The demand for such funds has increased during the last two years as they offer impressive returns. The Peninsula
