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MENA IPO Eye Q2 2019
MENA IPO EyeQ2 2019
2 MENA IP0 Eye Q2 2019
Key trends
IPO
MEN
A
• The MENA region witnessed a sizeable improvement in IPO activity both in terms of volume and value in Q2 2019 with six IPOs (including one REIT listing) raising proceeds of US$2,822.5m, compared with a single IPO that raised US$57.6m in Q1 2019.
• Saudi Arabia led the IPO activity in the region with three listings on the main market in Q2 2019 with the net proceeds of US$1,023.4m. Arabian Centres Company Limited, one of the largest IPOs in the country with proceeds of US$658.7m, was the first IPO that allowed the sale of securities to qualified institutional buyers in the US. Maharah Human Resources Company and SHUAA REIT FUND raised IPO net proceeds of US$207.0m and US$157.7m respectively. MSCI’s addition of Saudi stocks to its Emerging Markets Index is taking place in two phases with the first phase completed in June 2019 and the second phase due in August 2019. Three of five tranches of Saudi stocks have joined the FTSE Emerging-Market Index this year and the inclusion is expected to be fully completed by December 2019.
• The UAE witnessed the cross-border listings of two FinTech companies on the Premium Segment of the London SE, raising net proceeds of US$1,797.9m in Q2 2019.
• In order to facilitate onshore listing of UAE free zone companies, the Securities and Commodities Authority (SCA) has published the proposed amendments in 2019. Based on the proposed listing rules, the company should meet certain conditions such as:• The fully paid-up share capital shall not be less than US$5.4m (AED20m).• Shares offered must be between 30% to 70% of the issued share capital.• Shares offered must be restricted to qualified investors only.• Financial statements must be audited for two financial years.• Provision of no-objection from the regulatory body of the relevant free zone.
• NILEX SE, a part of EGX, witnessed the listing of Speed Medical Company raising proceeds of US$1.2m in Q2 2019. The subscription was covered 0.46 times.
Note: *Return is the share price change from the date of first trade to 30 June 2019. Source: Thomson Eikon, CapIQ and press. SE: Stock Exchange.
MENA IPO activity (Q1 2017 to Q2 2019*)
MENA GCCMENA IPO Eye
Q2 2019 reviewSix deals (one REIT listing)(33.3% decrease on Q2 2018)
Five deals (one REIT listing)(28.6% decrease on Q2 2018)
Volume
US$2822.5m(222.6% increase on Q2 2018)
US$2821.3m (264.7% increase on Q2 2018)Value
Issuer (exchange) Value (return (%)*)
Network International Holdings Limited (London SE)
US$1,400m (13.6%)
Arabian Centres Company Limited(Saudi SE)
US$658.7m (–0.6%)
Finablr PLC(London SE)
US$397.9m (–8.0%)
Top three issuers — Q2 2019 Top three sectors by capital raised — Q2 2019
*As on 01 July 2019.Note: IPOs, including REIT listings, have been considered in each quarter, based on the subscription closing date. Companies are included (re Nomu) from the date the Nomu segment was established, 26 February 2017.
Sector Value
Technology US$1,797.9m (two deals)
Real estates managements & development
US$658.7m (one deal)
Professional services US$207.0m (one deal)
Exchanges by capital raised — Q2 2019 Cross-border listingsEgypt SE
US$1.2m(one deal)
London SE
US$1,797.9m(two deals)
Saudi SE
US$1,023.4m(three deals)
Vol
ume
(num
ber
of I
POs
(incl
udin
g R
EIT
listi
ngs)
)15
0500
1,0001,5002,0002,5003,0003,500
$369.3 $418.6$91.1
$2,341.0$26.4
$328.8 $347.3$1,031.5
$31.5 $198.8$195.9
$262.6
$603.2$546.1
$63.3
$157.711
86
96
9
4
7
1
6
$57.60
5
10
Q1 17 Q2 17 Q3 17Q 4 17 Q1 18 Q2 18 Q3 18 Q2 19Q1 19Q4 18
Cap
ital r
aise
d (U
S $m
)
Deals (US$m) REIT listings (US$m) Volume (number of IPOs)
3MENA IP0 Eye Q2 2019
Summary of IPOs (Q2 2018 to Q2 2019)Quarter Issuer Size
(US$m) Sector ExchangeQ2 2019 — 14 May Finablr PLC 397.9 Technology London SE
Q2 2019 — 14 May Maharah Human Resources Company 207.0 Professional
services Saudi SE
Q2 2019 — 9 May Arabian Centres Co. Ltd. 658.7Real estate management & development
Saudi SE
Q2 2019 — 15 Apr Network International Holdings Limited 1,400.0 Technology London SE
Q2 2019 — 11 Apr Speed Medical Company 1.2 Healthcare Egypt SE (NILEX)
Q2 2019 — 07 Apr SHUAA REIT Fund 157.7 REIT fund Saudi SE
Q1 2019 — 21 Mar Al Moammar Information Systems Company 57.6 Software and
services Saudi SE
Q4 2018 — 12 Dec AOM Invest SpA 9.4 Leisure and tourism Algeria SE
Q4 2018 — 07 Dec Mutandis SCA 42.5 Consumer goods Casablanca SE
Q4 2018 — 29 Nov Alkhabeer REIT 63.3 Real estate (REIT) Saudi SE
Q4 2018 — 24 Nov APM Terminals Bahrain B.S.C. 32.0 Transport Bahrain SE
Q4 2018 — 12 NovQatar Aluminium Manufacturing Company Q.P.S.C.
758.7 Mining and metals Qatar SE
Q4 2018 — 28 Oct National Company for Learning & Education 65.9 Consumer
services Saudi SE
Q4 2018 — 10 Oct Sarwa Capital 123.0 Financial services Egypt SE
Q3 2018 — 25 Sep Cairo for Investment and Real Estate Development Co. 69.5 Real estate Egypt SE
Q3 2018 — 14 Sep Tunisie Valeurs SA 7.9 Financial services Tunis SE
Q3 2018 — 16 Aug Dhofar Generating Company S.A.O.C. 52.0 Power and
utilities Muscat SE
Q3 2018 — 7 Aug Leejam Sports Company 217.9 Consumer services Saudi SE
Q2 2018 — 29 Jun RA International Group PLC 24.6 Construction London SE (AIM)
Q2 2018 — 21 Jun Shelf Drilling 225.0 Oil and gas Oslo SE
Q2 2018 — 3 Jun MEFIC REIT Fund 234.5 Real estate (REIT) Saudi SE
Q2 2018 — 3 May Bonyan REIT Fund 173.7 Real estate (REIT) Saudi SE
Q2 2018 — 26 Apr Immorente Invest S.A. 43.4 Real estate (REIT) Casablanca SE
Q2 2018 — 8 Apr Swicorp Wabel REIT 94.4 Real estate (REIT) Saudi SE
Q2 2018—8 Apr National Building and Marketing Co. 8.6 Construction Saudi SE
(Nomu)
Q2 2018 — 2 Apr Arabia Falcon Insurance Co. 12.8 Insurance Muscat SE
Note: SE — Stock Exchange. Sources: CapIQ and Thomson Eikon.
Select IPOs in pipelineIssuer CountrySaudi Stock Exchange (Tadawul) KSASaudi Aramco KSARaoom Trading Company KSAAlkhabeer Capital KSAAtaa Educational Company* KSANumisbing UAETristar Transport LLC UAEEmirates Global Aluminium UAEEngineering for the Petroleum & Process Industries (Enppi) EgyptBanque du Caire EgyptMIDOR EgyptEgyptian Ethylene and Derivatives Company (Ethydco) EgyptMisr Insurance EgyptHassan Allam EgyptTAQA Arabia EgyptEl Farasha for Manufacture & Printing Packing Materials EgyptMusandam Power Company SAOC OmanOman Airports Management Company SAOC OmanAman REITs OmanA’Dhahirah Generating Company OmanQatar Pharma Factory QatarRayyan Water QatarShamal Az Zour Al Oula K.S.C. KuwaitKuwait Stock Exchange Kuwait
*Listed in Q3 2019 and will be covered in more detail in the next edition.Sources: CapIQ and Thomson Eikon.
Broader outlook• As part of Vision 2030, the Saudi Government has planned
privatization deals worth US$533m (SAR2b), to be carried out by the end of 2019. The privatization program focuses on the transfer of ownership through IPOs, asset sales, and public-private partnerships. The Government also remains committed to the Aramco IPO, which is expected to take place between 2020 and early 2021.
• With MSCI’s announcement of upgrading Kuwaiti equities to its main Emerging Markets Index in 2020, it has been reported that Kuwait’s capital market will attract around US$10b of additional investor flows from passive funds.
• Qatar announced plans to privatize its stock exchange with three to four listings each year to ensure a regular schedule of IPOs which in turn would increase trading activity and liquidity as well as offer investors greater opportunities. The QSE is also considering adding a new Energy Index in 2019.
• In accordance with the new Commercial Companies Law, the Government of Oman is planning to issue new regulations related to matters including listings of new companies, sukuks and other debt funds. The new law is aimed at building a more robust capital market.
• The Egyptian Government seeks to offer 23 public companies on the Egyptian Exchange (EGX) during the next 24 and 30 months.
• Global IPO exchange activity continued to pick up in Q2 2019, with 302 IPOs raising US$56.8b, marking an increase of 47.3% in IPO volumes compared with Q1 2019, despite the US-China trade tensions and uncertainties related to Brexit. The health care, technology, and industrial sectors remained the top three sectors by the number of IPOs issued during Q2 2019. Across MENA, the IPO activity is expected to progress cautiously, with an optimistic outlook owing to events and themes such as the MSCI and FTSE inclusions, privatisation drives and government initiatives.
Source: CapIQ, Thomson Eikon and Press.
Regional stock market performance —YTD 2019 (%)
Note: Updated as on 01 July 2019. Source: CapIQ.
Exchange YTD index return Market cap (US$b)Saudi SE 12.9% 562.9
Qatar SE 2.5% 139.7
Abu Dhabi SE 1.3% 142.9
DFM 5.7% 73.4
EGX 8.2% 23.9
BSE 10.4% 24.0
FTSE 350 10.9% 3172.6
Saudi SE (Nomu) 47.5% 1.22
Note: Return updated as on 01 July 2019; market cap updated as on 01 July 2019. Source: Thomson Eikon.
Oil price movement (YTD 2019)
OPEC price Europe Brent crudeOil
pric
es (U
S$ p
er b
arre
l)
01 J
uly
2019
Jun2018
Jul2018
Aug2018
Sep2018
Oct2018
Nov2018
Dec2018
Jan2018
Feb2018
Mar2018
Apr2018
May2018
Jun2018
Jul2018
020406080
100
Note: Prices updated as on 01 July 2019.Source: Organization of the Petroleum Exporting Countries (OPEC) and Energy Information Association (EIA).
Mar
ket
retu
rn
(per
cent
age
chan
ge)
Abu Dhabi SE (AD) Bahrain SE (BSE) Dubai FM (DFM)Qatar SE Saudi SE (SASE) Egypt SEFTSE 350 Nomu Muscat MSM
-20%0%
40%20%
60%
Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19
Contacts How EY teams can help
Key events
• For any company considering an IPO on a MENA or international stock exchange, it is critical to map out the IPO value journey.
• As a first step to effective IPO planning, we recommend undertaking an IPO readiness diagnostic to identify the key gaps across several areas of the business when compared with best practice and stock exchange requirements.
• A key output of the IPO readiness diagnostic is a detailed road map of activities to address the identified gaps, actioned with the assistance by EY professionals and other advisors.
• Effective IPO planning and execution will increase your chances of a successful IPO transaction, help improve your business, and save time and costs during the IPO journey.
EY IPO services
1 IPO readiness diagnostic Includes various follow-up services to help address the IPO readiness gaps identified
2 IPO execution services Dependent on listing destination, including: financial due diligence, working capital reports, feasibility studies, valuation services, financial positions and prospects, MD&A section of prospectus drafting, comfort letters and project management services
EY MENA IPO teams have experience in executing IPO services across key exchanges in MENA and internationally
Darrell TraynorAssociate Partner, Ernst & Young Middle East (Abu Dhabi Branch)[email protected]+971 2417 4571
Mayur PauPartner, Ernst & Young Middle East (Dubai Branch) and EY MENA Growth Markets and Financial Services - IPO [email protected]+971 4312 9446
Gregory HughesPartner, Ernst & Young Middle East (Dubai Branch) and EY MENA Transaction Advisory Services - IPO [email protected]+971 4701 1851
7
IPO planning IPO execution Post-IPO
Name of the event
Date Theme
Mergermarket Saudi Arabian M&A and Capital Markets Forum
9 September 2019
The event will bring together dealmakers and provide an overview of the market through panels and case studies. It will also provide insights and the platform to network with dealmakers in the region.Venue: Dubaievents.mergermarket.com/saudi
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EYG no. 003573-19Gbl ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice.
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