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Initial public offerings (IPOs) from GCC countries represented 90 per cent of all Middle East and North Africa (Mena) IPOs in the first half of 2014, according to a report from professional services firm EY (Ernst & Young).
GCC firms raised $2.26 billion from 10 IPOs which was 14 per cent and 67 per cent higher in volume and proceeds respectively, than in the first half of 2013. Saudi Arabia led the GCC IPO activity in the first half of the year with four IPOs, followed by the UAE with three, Oman with two and Qatar with one.
The Mena IPO market continued its recovery to end the first half of the year strongly, according to EY’s Mena IPO update for the second quarter of 2014. There were a total of 16 deals raising $2.4 billion in the first six months of the year, an increase of 14 per cent 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 the second quarter of 2014, IPO activity in the region picked up pace and there were 11 IPOs raising $1.1 billion, a 129 per cent increase on the previous quarter and a rise of 22 per cent compared to the second quarter of 2013 by deal numbers.
“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,” said Phil Gandier, Mena Transactions Leader, EY.
Qatar’s Mesaieed Petrochemical Holding Company launched the region’s largest issue in Qatar, raising $903 million in January 2014. Saudi Arabia and Tunisia had the highest number of IPOs with four each across the first half of the year,
“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,” says Mayur Pau, Mena IPO Leader, EY. 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.
“In the second half of 2014 we expect the Mena IPO market to remain buoyant with the fundamentals in place for a sustained period of strong and steady IPO activity. With a solid pipeline of IPO-ready businesses across a broad range of geographic markets and from multiple sectors, strong investor confidence and expected “IPO friendly” regulatory and legal reforms in key markets, we expect an uptick of IPOs in the second half of 2014,” Gandier.
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