The number and value of initial public offerings (IPOs) in the Mena region both fell in 2018 as companies deferred their plans to go public.
According to the latest EY Mena IPO Eye report, $2.9 billion was raised from 26 IPOs, representing a fall of 24.6% in value and 23.5% in activity from the previous year.
Saudi Arabia remained the region’s biggest market raising $1.47 billion through 12 IPOs. However, the kingdom was also responsible for the postponing the floatation of state energy company, Aramco, which was expected to be one the biggest IPOs of all time. The planned sale of 5% of the company was forecast to raise more than $100 billion.
The deferred IPO plans can be attributed to a number of reasons including challenging economic conditions affecting regional businesses and global trade concerns, said Phil Gandier, Mena transactions leader for EY.
“Regulatory changes and a rising interest rate environment over the past year have also contributed to decreased activity,” said Gandier. “However, despite the slowdown, 26 IPOs were recorded in the region across sectors over the past year, indicating an appetite for more diversified activity.”
The decline in Mena IPO activity was somewhat in line with global patterns. In 2018, global activity also declined in both value and number with 326 IPOs raising $53.7 billion, a fall of 34% and 10% respectively compared to 2017.
However, despite the decline in 2018, EY is optimistic about Mena’s prospects for 2019 and beyond citing Saudi Arabia’s privatisation plans for more than 20 companies across various sectors as well as several initiatives from the country’s stock exchange, the Tadawul, designed to increase investors’ exposure to local companies including the launch of stock index futures planned for the first quarter of 2019.
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