RIYADH: Saudi Arabia led the initial public offering activities in the Middle East and North Africa region during the third quarter of this year, hosting five out of the total six IPO listings.
According to a report released by EY, these transactions collectively raised $330 million.
Lumi Rental Co., listed on Saudi Arabia’s Tadawul All Share Index, generated the highest proceeds at $291 million, while the other four IPOs in the Kingdom’s parallel market raised a total of $39 million.
As part of its Vision 2030 initiative, Saudi Arabia is actively diversifying its economy by reducing its reliance on oil-related activities, and this is evident in the range of firms listed, with three of the IPOs in the Kingdom coming from the transportation sector, contributing a $302 million to the total IPO proceeds.
Brad Watson, EY MENA strategy and transactions leader, said: “IPOs remain driven by the dominant economies of Saudi Arabia and the UAE, which are pursuing their strategic agenda of increasing capital market activity on the local exchanges and stepping up efforts to attract foreign investment.”
While the MENA region saw a total of six IPO listings during the third quarter, raising $523 million, this represented a 14 percent decrease in the number of IPOs and a 66 percent drop in proceeds compared to the same period in the previous year.
For the first nine months of this year, the MENA region recorded 29 IPOs with total proceeds of $5.8 billion. This marks a 6 percent reduction in volume and a 61 percent decline in funds raised compared to the same period in 2022.
The report emphasizes that investor confidence remains strong in the region, with 21 out of the 29 year-to-date IPOs ending the third quarter of 2023 with a gain in share price since their listing.
Despite the lower levels of proceeds from MENA IPOs, the pipeline for the fourth quarter of 2023 and 2024 looks promising, primarily driven by Saudi Arabia.
Tadawul has already seen three listings in the fourth quarter of 2023, including ADES Holding Co. on the main market, Atlas Elevators General Trading & Contracting Co., and Intelligent Oud Co. trading on Nomu.
The report also notes that the Qatar stock exchange reported the second-largest MENA IPO of the third quarter, with MEEZA QSTP raising $193 million.
The outlook for the remainder of 2023 and 2024 is optimistic, with expectations of a healthy number of IPOs in the MENA markets based on the current pipelines.
“The fourth quarter of 2023 is already off to a strong start with three IPOs successfully completed in Saudi Arabia, and we are expecting additional IPOs toward the end of 2023 in the UAE,” added Gregory Hughes, EY MENA IPO and transaction diligence leader.
