2
MENA IPO summary Q3 2017 Key trends Commentary MENA GCC Five deals (400% increase on Q3 2016) Five deals (no deals in Q3 2016) Volume US$236.7m (20% increase on Q3 2016) US$236.7m (no deals in Q3 2016) Value (capital raised) IPO MENA ► In Q3 2017, five IPOs were executed in MENA, raising US$236.7m, of which three were on the Saudi Stock Exchange main market (Saudi SE or Tadawul). ► Saudi Arabia opened its stock market to REIT funds in 2016 and has seen six REIT listings since. In Q3 2017, two REIT funds were listed on the Tadawul main market, collectively raising proceeds of US$144.8m. ► After a gap of two years, Muscat Securities Market (MSM) witnessed two IPOs, Vision Insurance and Al Ahlia Insurance Company, raising US$29.9m in Q3 2017. ► Since its inception, the Saudi NOMU market index has declined by 43% to the end of Q3 2017, with no new IPOs in the quarter driven by the maturity of the market segment. ► Oil prices increased to a two-year high at the end of September 2017, due to OPEC’s production cuts and recent disruption to oil production in the US following the impact of major hurricanes. ► The new norm for oil prices in the last few years continues to drive a growing focus of regional governments on privatization initiatives across MENA. Based on the IPO pipeline, we expect to see a number of government or quasi-government owned assets being floated over the next two years, particularly assets in energy related sectors. We believe many private equity backed and family groups continue to assess the IPO market and are working on readiness for attractive IPO opportunities. Top three issuers Musharaka REIT Fund Zahrat Al Waha for Trading Company Al Maather REIT Fund US$62.0m (Saudi SE) US$95.1m (Saudi SE) US$49.7m (Saudi SE) Top exchanges by capital raised Saudi SE US$206.8m (three deals) MSM US$29.9m (two deals) Top sectors by capital raised REIT fund Industrial manufacturing Insurance US$62.0m (one deal) US$144.8m (two deals) US$29.9m (two deals) Source: Thomson Eikon, Capital IQ and EY analysis. Note: SE – stock exchange, FM – financial Market, SM – stock market. *Return is index change from 1 January to 29 September 2017; NOMU index from 27 February (launch date). Continued stability in oil prices and confidence in the global economy and markets are likely to drive increased IPO activity across MENA, with the privatization of leading government-owned or partially government-owned assets across a number of sectors, particularly energy, as MENA governments seek to raise capital. Saudi Arabia continues to lead the way for IPO activity in the region, with an increasing trend of REITs being listed on the exchange underlining investor interest in real estate assets in the country. Global IPO activity for 2017 is on course to be the busiest year since 2007, with circa 1,600 to 1,700 IPOs expected to raise US$190b to US$200b. This is similarly reflected in the outlook for the MENA IPO market, with YTD 2017 outperforming YTD 2016 and a strong backlog of IPOs potentially preparing to come to market in Q4 2017 and 2018, based on global equity market buoyancy supporting the IPO story in the region. Mayur Pau EY MENA TAS FS Leader, Strategic Growth Markets and FS IPO Leader Gregory Hughes EY MENA IPO Leader Equity indices returns (YTD*) Abu Dhabi SE –3.0% Muscat SM -9.9% Bahrain SE 5.2% Qatar SE –20.3% Dubai FM (DFM) 0.7% Saudi SE (Tadawul) 0.5% Egypt SE 13.0% Saudi SE (NOMU) -43.0% Kuwait SE 15.7%
