Dubai: Saudi Arabia led the Middle East & North Africa region in initial public offering (IPO) activity, both in terms of value and volumes, last year, according to an Ernst and Young report.
About 12 IPOs were listed in the largest equity market in the region valuing $1.47 billion (Dh5.39 billion), the latest EY MENA IPO Eye report said.
The GCC region recorded a total of 18 IPOs valued at $2.56 billion in 2018.
The kingdom is also planning the privatisation of more than 20 companies in 2019 in sectors that include water, agriculture, energy, and sports.
To help increase transparency, the government plans to retain a minority interest in the businesses and undertake IPOs and other transactions for a certain percentage of each asset.
The Mena region raised $2.94 billion through 26 IPOs, according to the report. Compared to 2017, IPO values declined year on year by 24.6 per cent while activity fell 23.5 per cent.
“IPO activity in the Mena region saw a decline in 2018 as several entities across the region deferred their plans for IPOs,” Phil Gandier, MENA Transactions Leader, EY, said.
“This can be attributed to various reasons, including challenging economic conditions affecting regional businesses and global trade concerns. Regulatory changes and a rising interest rate environment over the past year have also contributed to decreased activity,” he added.
“However, despite the slowdown, 26 IPOs were recorded in the region across sectors over the past year, indicating an appetite for more diversified activity.”
According to Gregory Hughes, Mena IPO leader at EY, there is a high interest in IPOs across the Mena region, especially on the part of companies seeking to access international investors and exchanges. However, many plans have been delayed for numerous reasons that include business underperformance due to the challenging economic environment, global market volatility, and the time it takes to adapt to public company listing requirements, he added.
“We continue to work with many companies in preparation for transactions in 2019 and beyond, particularly from the United Arab Emirates, Saudi Arabia, and Egypt,” he said.
Globally, IPO activity continued to slow down in the fourth quarter of 2018, with 326 IPOs during the period raising $53.7 billion, a 34 per cent decline quarter on quarter and 10 per cent year on year.