According to EY, Mena companies raised $1.5 billion through seven IPOs in the third quarter

Companies in the Mena region raised approximately $1.5 billion in the third quarter of 2022 through seven IPOs in the region’s capital markets, led by the United Arab Emirates and Saudi Arabia.

The number of Mena-based companies listed on the region’s stock exchanges this year has more than tripled to 31 IPOs, according to the latest report from global consulting firm EY.

They have raised a total of $14.7 billion so far this year, a 550 percent increase over the same period in 2021.

“Although IPO volumes and values ​​have declined significantly in most other global markets, the Mena region continues to carve out its own path with a steady stream of new listings in the third quarter [the third quarter]which is in addition to the large number of IPOs already announced across exchanges year to date,” said Brad Watson, Head of Mena Strategy and Transactions at EY.

“While Saudi Arabia and the United Arab Emirates account for the majority of new listings, we are also seeing increased signs of future activity in some of the region’s smaller markets – notably Kuwait, Oman and Qatar.”

Various state-owned companies have gone public in the UAE and private companies are now following suit.

Earlier this week, Bayanat, a provider of geospatial products and services owned by Abu Dhabi-based artificial intelligence and cloud computing company G42, announced that it intends to invest more than Dh628.5 million ($171 million) to raise from its IPO.

Earlier this month, Burjeel Holdings, Abu Dhabi-based healthcare provider, listed its shares on the Abu Dhabi Securities Exchange after raising more than Dh1.1 billion from the sale of an 11 percent stake through the company’s IPO.

Other companies set to go public this year include Borouge, the joint venture between Adnoc and Austrian chemical producer Borealis, and Abu Dhabi Ports Group, operator of industrial cities and free zones in the emirate.

Dubai has registered a string of IPOs of state-owned companies aiming to increase the size of the emirate’s capital market to around Dh3 trillion.

As part of those plans, Dubai announced earlier this week that it intends to sell a 10 per cent stake in Emirates Central Cooling Systems Corporation, better known as Empower, the emirate’s district cooling provider.

Dubai’s most recent IPO came in September when toll operator Salik raised Dh3.73 billion from the sale of a 24.9 percent stake.

Dewa raised Dh22.41 billion from its IPO earlier this year, making it the largest IPO in the Middle East and Europe since Saudi Aramco went public in 2019.

Tecom, the business district operator in Dubai, also made its DFM debut in early July after raising Dh1.7 billion in its IPO a month earlier.

There have been a total of 992 IPOs globally so far this year, up 44 percent from the same period in 2021, EY said.

Collectively, these global companies have raised $146 billion, a 57 percent annual decline, as companies and investors continue to face mounting macroeconomic challenges, market uncertainty, rising volatility and falling global stock prices, the report said.

“However, the Mena region has generally bucked the global trend, with IPO activity and pipeline remaining strong despite weaker global sentiment,” EY said.

Regionally, the listing of Salik became Mena’s largest IPO in the third quarter. It was also the fourth largest in the region so far this year.

The IPO was more than 49 times oversubscribed across all tranches, with aggregate gross demand of $50.2 billion.

IPO activity returned to Morocco for the first time since last year, with Disty Technologies SA, a Moroccan IT company, raising about $17 million on the Casablanca Stock Exchange, the report showed.

Companies in Saudi Arabia conducted two IPOs on the main market of the Tadawul exchange and three IPOs on the Nomu parallel market, generating $490 million in revenue in the third quarter.

Of these, the IPO of Alamar Foods Company was the largest at $326 million and the order book for the IPO was about 48 times oversubscribed.

Overall, 2022 was a strong year for IPOs across the Mena region, with investor confidence remaining high despite challenging financial headwinds around the world, said Gregory Hughes, IPO and Transaction Diligence Head of EY Mena.

“If we look at Q4 [the fourth quarter]we see no signs of that changing as several prominent companies in the region have completed their IPOs,” he said.

“We also anticipate increased activity on dual listings to tap into various liquidity pools; and continued government divestment processes in the United Arab Emirates, Oman and other countries, as well as the movement of family businesses believed to be planning to enter various parts of the region.”

Updated October 27, 2022 at 4:30 am

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