The Mena region recorded an increase in IPO volume and value during Q1 2020, with four IPOs - including one REIT listing - raising total proceeds of $814.2m. This represents a 14-fold increase when compared to the $57.6m raised from one IPO in the same period last year, the EY MENA IPO report noted.
Global IPO exchange activity also continued to pick up in Q1 2020, with 235 IPOs raising $28.5bn in IPO value during Q1 2020, compared to $15.1bn in the same quarter of the previous year.
Matthew Benson, MENA Transaction Advisory Services Leader, EY, said: “The year began with strong optimism and promise for the IPO market in the Mena region. The drop in economic growth and disruption across various industries caused by the COVID-19 pandemic, as well as the decline in demand for oil, and reduction in oil prices, have forced potential issuers to rethink timelines and delay their bourse debuts – a prudent move given the current market scenario. Potential issuers nevertheless continue to seek new capital, in some cases driven by the current market environment.”
In Oman, Aman REIF, a REIT listing, floated 50 percent of its shares on the Muscat SE in a deal that raised $52.5m in January 2020. GCC countries have adopt additional standards and explore privatization.The Bahrain Bourse adopted new listing rules and allowed a three-month grace period for companies currently listed on the market to meet new requirements.
Kuwait strengthened its capital markets with the privatization of its stock exchange in December 2019 and the introduction of the BK Main 50 Index. When Kuwait upgrades its equities to its main emerging markets index in 2020, it could trigger billions of dollars in inflows from passive funds.
Gregory Hughes, MENA IPO Leader, EY, said: “We have seen that capital markets around the region have granted additional flexibility to public companies during the COVID-19 crisis period.
The IPO markets are not likely to quickly rebound in Q2 or Q3 2020, but we are aware of several companies that are preparing for offerings after this period. Investor sentiment will continue to be cautious, given significant volatility in the markets and uncertainty regarding future events including COVID-19 impact, oil pricing, and the US elections among other things.”
