DOHA: The IPO activity in Mena region is inching closer to pre-crisis levels of 2008, induced by positive sentiment in the region’s equity markets. IPOs raised $9.6bn in 2014 against $12.4bn in 2008, after averaging $1.8bn during 2009-13. Analysts expect the momentum will continue, driven by MSCI’s market upgrade of Qatar and UAE.
Global Investment House’s (GIH) Mena IPO analysis noted IPO market in the region picked up in 2014 after lackluster performance in previous five years. The market performed vigorously during January-November 2014, raising $9.6bn from 21 IPOs. This was the market’s best performance in terms of proceeds after the 2008 economic crisis when it had raised $12.4bn from 45 issues. However, the average deal size in 2014 was significantly higher than that of 2008 by 66 percent. In the last few months, the IPO market witnessed intense activities, raising $8.3bn.
“We expect the momentum to continue, driven by MSCI’s upgrade of Qatar and the UAE to Emerging Markets, liberalisation of Saudi stock market, sustained investment in developing social infrastructure, and capacity building to host upcoming global events such as FIFA 2012 in Qatar and Expo 2020 in Dubai,” the analysts said. Improved valuations, upbeat fundamentals of the Mena region as well as relaxed regulatory norms are key catalysts with would continue driving equity markets, boosting the IPO activity in 2015, with GCC countries in the lead.
Led by improved economic sentiment across the globe and increased liquidity, the IPO market began recovering in 2013, with the number of listings doubling to 24 from 12 in 2012. The proceeds rose 26.1 percent year-on-year to $2.4bn from $1.9bn in 2012. This growth momentum gained considerable pace in 2014 after Qatar and UAE were included in the MSCI Emerging Markets and Saudi Arabia announcing the opening of its markets. These activities, amid acceleration in Mena’s GDP, resulted in a rally in stock markets with Qatar and Dubai markets up 32 percent and 50 percent, respectively, until first nine months of 2014, while Saudi markets rose 27 percent during the same period, leading to a revival in IPO activity across the region.
Increased foreign ownership limit, especially in Qatar, is expected to improve the flow of foreign funds into regional equity markets. This would also set the momentum for IPO markets.
The GIH report noted GCC countries had the largest share of IPO listings in Mena, constituting nearly 91.7 percent of capital raised from 67 IPOs. During the first nine months of 2014, the countries accounted for 90.1 percent of the capital raised through IPOs in Mena, raising nearly $2.7bn from 11 IPOs. Qatar’s share accounted for 5.6 percent of the total capital raised during
2009-14. The Peninsula
