The MENA region saw a total of nine IPOs in 2020, raising proceeds of US$1.86b
In Egypt, three army-affiliated companies are expected to attract foreign and local investors hoping to own 100% stakes
Egyptian IPO activity in was subdued in 2020, with one IPO raising US$13m
According to the EY MENA IPO Eye Q4 2020 report, the MENA region saw nine IPOs raise proceeds of US$1.86b, a fall of 40% in total issuances and 94% in total proceeds when compared with 2019. Out of the nine issuances, six were in the real estate sector, of which two were real estate investment trusts (REITs), with the remaining in the health care, consumer staples and insurance sectors.
Despite a subdued annual picture, Q4 2020 rebounded after a quiet Q2 2020 and one IPO in Q3 2020, with four IPOs in the MENA region raising US$925m in total. Although the number of IPOs decreased by 33% and proceeds were down 97% compared with the same quarter in 2019, Q4 2020 did have the highest proceeds of the year.
Globally, IPO numbers continued to pick up with 1,363 IPOs taking place in 2020, a 19% rise when compared with the previous year. Additionally, proceeds increased by 29% from 2019, rising to US$268b – the highest proceeds since 2010’s record of US$290.2b raised via 1,361 IPOs.
Matthew Benson, EY MENA Strategy and Transactions Leader, says:
“A decline in economic growth and significant disruption across various industries caused by the COVID-19 pandemic, together with a decrease in demand for oil, had a considerable impact on MENA stock performances in 2020. Markets were also impacted at a global level. Market volatility in the first half of the year was higher than at any time since the global financial crisis, although it quickly subsided, and the latter half of the year presented some strong IPO market performances. As 2021 begins, we believe that continued fiscal stimulus measures, an abundance of liquidity and growing confidence in COVID-19 vaccination programs will sustain positive IPO momentum.”
Despite a drop of nearly 30% earlier in 2020, the Tadawul recovered to end 2020 with a positive index return of 3.6%, which was aided by the recovery in crude oil prices. The Egyptian Exchange (EGX) saw the biggest decline among the observed indices, having lost 22.3%. The Abu Dhabi Securities Exchange (ADX) ended the year relatively flat, while the Dubai Financial Market (DFM) and Boursa Kuwait indices both fell by 10% and 13% respectively during the same period. Equity markets in the MENA region experienced high volatility and average daily trading values increased significantly across the main exchanges.
Egypt announces plans to privatize three army-affiliated companies by early 2021
IPO activity in Egypt started promisingly but remained subdued throughout the year. While 14 companies were expected to go public in 2020, only one IPO – that of Emerald Real Estate Investments – ended up materializing, raising US$13m in Q1 2020. However, activity is likely to pick up, with three army-affiliated companies expected to be privatized in early 2021. These companies will attract both local and foreign investors who will have the opportunity to own up to 100% of the firms. Other anticipated upcoming IPOs are E-finance, Aman Holding, Ghazl El Mahalla and Taaleem.
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It was expected that this year will see a flow of offerings from the private and public sectors, such as e-finance, Banque du Caire, Ebtikar for Financial Investments, the Giza Spinning and Weaving Company, and several Armed Forces affiliated companies.