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MENA IPO EyeQ3 2017
2 MENA IP0 Eye 2017
MENAFive deals(400% increase on Q3 2016)
US$236.7m(20% increase on Q3 2016)
Five deals(no deals in Q3 2016)
US$236.7m(no deals in Q3 2016)
GCC
Volume
Value
MENA IPO Eye
Q3 2017 review
Key trends
IPO
MEN
A
• In Q3 2017, MENA IPO activity was primarily driven by three IPOs on the Saudi SE (main market), including Musharaka REIT Fund, which raised US$95.1m and was the largest IPO by capital raised in Q3 2017, followed by Zahrat Al Waha for Trading Company, which raised US$62.0m and Al Maather REIT Fund, which raised US$49.7m.
• 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.
• In the last year, the GCC markets have witnessed an increase in activity and demand in the region’s relatively new REIT market. 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 Saudi SE (main market), collectively raising US$144.8m.
• No new listings were recorded in the Saudi NOMU market during Q3 2017. This follows nine IPOs in H1 2017 after the launch of the exchange segment in February 2017. The NOMU index continued to decline during Q3 2017 and was down by 43% from its launch date to the end of September 2017.
• Oil prices increased to a two-year high at the end of September 2017, due to OPEC’s production cuts and the recent disruption to oil production in the US following the impact of major hurricanes. Oil prices have increased by more than 15% in the last three months due to production cuts by OPEC, Russia and several other producers of about 1.8 million barrels per day (bpd) since the start of 2017.
• The US Federal Reserve left interest rates in the range of 1.25% to 1.5% in Q3 2017, with one rate hike expected at the end of 2017, which may impact investor appetite for equities versus debt instruments going forward. However, in Q3 2017 the global capital markets indices continued to trade at high levels, due to robust company earnings, increasing macroeconomic stability and strong investor sentiment.
• Q3 2017 saw 330 IPOs globally, with total proceeds of US$37.6b, driven by 10 US$1b+ deals pushing stock exchanges in Brazil, Singapore, Switzerland and India onto the list of the world’s top 10 stock exchanges by capital raised, behind Shanghai and Hong Kong. Asia-Pacific continues to dominate IPO activity both by number of deals and proceeds, accounting for 60% of IPOs and 42% of capital raised worldwide so far in 2017.
• Global IPO volume in the first nine months of 2017 has already exceeded the full-year total for 2016, with 1,156 IPOs globally (up 59% on YTD 2016) and proceeds of US$126.9b (up 55% on YTD 2016).
Issuers – Q3 2017Issuer Amount raised (US$m) Sector Exchange Return (%)*Musharaka REIT Fund 95.1 REIT fund Saudi SE –2.4%
Zahrat Al Waha for Trwading Company 62.0 Industrial manufacturing Saudi SE 5.9%
Al Maather REIT Fund 49.7 REIT fund Saudi SE –3.6%
Al Ahlia Insurance Co. 19.5 Insurance MSM –1.2%
Vision Insurance 10.4 Insurance MSM 0.0%
Source: Thomson Eikon, CapIQ and press.*Return is share price change from first trade date until 29 September 2017. Note: SE — stock exchange.
MENA IPO activity (Q1 2016–Q3 2017*)
*As at 3 October 2017.Note: the number and value of IPOs have been updated in certain quarters post Q4 2016 to include IPOs related to the Saudi parallel market (NOMU) and REIT funds on the Saudi Arabian stock exchange main market (Saudi SE or Tadawul), which were previously excluded.
$598.0
$397.2
$197.2$218.9
$401.1
$619.9
$236.72
6
1
5
11
8
5
100
200
300
400
600
500
0
700
Vol
ume
(num
ber
of IP
Os)
Cap
ital
rai
sed
(US$
m)
0
2
4
6
8
10
12
Capital raised (US$m) Volume (number of IPOs)
Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17
Exchanges by capital raised — Q3 2017Saudi SE Muscat SM
US$206.8m(three deals)
US$29.9m(two deal)
Cross-border listings
NA
3MENA IP0 Eye 2017
Select IPOs in pipeline*Issuer CountrySaudi Aramco KSA
Marafiq Power & Water Utility Co for Jubail & Yanbu KSA
Sadara Chemical Co. KSA
Saudi Arabian Airlines (Cargo division) KSA
Saudi Stock Exchange (Tadawul) KSA
Etihad REIT UAE
Emirates District Cooling LLC UAE
Abu Dhabi Ports Co. UAE
ADNOC Distribution UAE
Emaar Development Company UAE
Emirates Global Aluminium (EGA) UAE
Engineering For The Petroleum & Process Industries Egypt
Misr Italia Egypt
Banque du Caire Egypt
National Life & General Insurance Co Oman
Muscat Electricity Distribution Oman
Qatar Exchange Qatar
Az-Zour North Independent Water and Power Project Kuwait
Kuwait Energy Kuwait
Source: CapIQ and Thomson Eikon. Note: IPOs formally announced by the company and defined as announced by Thomson Eikon.
Summary of IPOs (Q3 2016–Q3 2017)Regional stock market performance (YTD 2017 (%))
Note: updated 30 September 2017.Source: CapIQ.
Mar
ket
retu
rn (p
erce
ntag
e ch
ange
)
Bahrain SE (BSE) Dubai FM (DFM)
Saudi SE (SASE) Egypt SE (EGX)
Abu Dhabi SE (AD)
Qatar SE (QSE)
FTSE 350 NOMU
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 Jul 17 Aug 17 Sep 17
Exchange YTDMarket cap
(US$b)FTSE 350 5.00% 3,348.00
SASE 0.50% 455.60
AD –3.00% 131.50
QSE –20.30% 95.40
DFM 0.70% 83.60
BSE 5.20% 20.40
EGX 13.00% 20.70
NOMU –43.00% 0.60
Source: Thomson Eikon and Saudi SE.
Oil price movement (last 12 months)
OPEC price Europe Brent crude
Oil
pric
es (U
S$ p
er b
arre
l)
Sep
’16
Sep
‘16
Oct
‘16
Nov
‘16
Dec
‘16
Jan
‘17
Feb
‘17
Mar
‘17
Apr
‘17
May
‘17
Jun
‘17
Jul ‘
17
Aug
‘17
Sep
‘17
0
10
20
30
40
50
70
60
Source: OPEC and Energy Information Association (EIA).
Broader outlook• The MENA IPO market outlook is positive against the
backdrop of increasing stability in oil prices, improving investor confidence in the global markets and a strong desire to raise funds through privatization, resulting in a large pipeline of companies potentially preparing to come to market.
• The UAE, Saudi Arabia and Egypt have a strong pipeline of both announced IPOs and IPOs in the pipeline.
• Based on the pipeline of IPOs, we expect to see a number of premium government or quasi-government-owned assets being floated over the next two years, particularly in the energy-related sector.
• 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$200b. This is ssimilar to the outlook for the MENA IPO market, with YTD 2017 outperforming YTD 2016 and a strong backlog of IPOs potentially preparing to come to market in Q4 2017 and early 2018.
Source: CapIQ, Thomson Eikon and press.
Source: CapIQ and Thomson Eikon.
Quarter Issuer Size (US$m) Sector Exchange
Q3 2017 – 20 Aug Zahrat Al Waha for Trading Company
61.2 Industrial manufacturing
Saudi SE
Q3 2017 – 7 Aug Vision Insurance 10.4 Insurance MSM
Q3 2017 – 2 Aug Al Ahlia Insurance Co 19.5 Insurance MSM
Q3 2017 – 25 Jul Musharaka REIT Fund 95.1 REIT fund Saudi SE
Q3 2017 – 2 Jul Al Maather REIT Fund 49.7 REIT fund Saudi SE
Q2 2017 – 15 Jun Orient UNB Takaful Insurance 16.3 Insurance DFM
Q2 2017 – 6 Jun Alkathiri Holding Co. 6.8 Industrial manufacturing
Saudi SE (NOMU)
Q2 2017 – 18 May Thob Al-Aseel 68 Consumer goods Saudi SE (NOMU)
Q2 2017 – 12 May ADES International Holding Ltd. 243.5 Oil and gas London SE
Q2 2017 – 10 May Taleem REIT Fund 23.1 REIT fund Saudi SE
Q2 2017 – 20 Apr Raya Contact Center 44.6 Business services Egypt SE
Q2 2017 – 6 Apr M.M. Group for Industry and International Trade, S.A.E.
39.3 Capital goods Egypt SE
Q2 2017 – 3 Apr Jadwa REIT Alharamain Fund 178.2 REIT fund Saudi SE
Q1 2017 – 6 Mar Atelier Du Meuble Interieur SA 3.5 Consumer goods Tunis SE
Q1 2017 – 5 Mar Emirates NBD Asset Management
105 REIT Nasdaq Dubai
Q1 2017 – 14 Feb Arab Sea Information Systems 5.9 Information technology
Saudi SE (NOMU)
Q1 2017 – 13 Feb Development Works for Food 4.3 Leisure and tourism Saudi SE (NOMU)
Q1 2017 – 12 Feb Al Samaani Factories for Metal Industries
4.6 Industrial manufacturing
Saudi SE (NOMU)
Q1 2017 – 10 Feb Raydan 57.6 Leisure and tourism Saudi SE (NOMU)
Q1 2017 – 9 Feb Al Omran Group 9 Food and beverage Saudi SE (NOMU)
Q1 2017 – 9 Feb Abdullah Saad Mohammed Abo Moati Stationaries Co.
12.8 Consumer goods Saudi SE (NOMU)
Q1 2017 – 22 Jan AlJazira Mawten REIT Fund 31.9 REIT fund Saudi SE
Q1 2017 – 22 Jan Investment Holding Group 135 Construction Qatar SE
Q1 2017 – 17 Jan Baazeem Trading 31.6 Retail Saudi SE (NOMU)
Q4 2016 – 22 Dec Arabian Rocks Plastics Industries 0.3 Industrial manufacturing
Egypt SE
Q4 2016 – 16 Dec Sanimed SA 7.5 Ceramics Tunis SE
Q4 2016 – 13 Dec Obour Land for Food Industries 41.2 Consumer goods Egypt SE
Q4 2016 – 6 Dec Eskan Bank Realty Income Trust 36.6 REIT Bahrain SE
Q4 2016 – 9 Nov Riyad REIT Fund 133.3 REIT fund Saudi SE
Q3 2016 – 1 Jul Société d'Exploitation des Ports 197.2 Transport Casablanca SE
Contacts How EY can help
Key events
Mayur PauPartner — EY MENA Growth Markets and Financial Services IPO [email protected]+971 4312 9446
• 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 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 identified gaps, actioned with the assistance of EY professionals and other specialist 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 Including various follow-up services to help address the IPO readiness gaps identified, such as project management services (remedial phase), IT support and implementation, sustainability reporting, financial reporting enhancement, business plan and modeling support, strategy services, debt advisory services and policies and procedures support
2 IPO execution services Dependent on the listing destination, including financial due diligence, working capital report, feasibility studies, valuation services, financial positions and prospects, MD&A section of prospectus drafting, comfort letters and project management services
EY has a dedicated MENA IPO team that has experience in executing IPO services across key exchanges in MENA and internationally.
Name of the event
Date Theme
DFM IPOForum 2017 Going public: the journeyto sustainable growth
November 2017
The fourth Dubai Financial Market (DFM)IPO Forum addresses Dubai’s latest market developments for companies considering an IPO, the strategic decision of going public and the timing of the IPO. Expert speakers and panelists from regulatory, advisory and investment banking sectors will discuss key decisions and preparations for companies considering going public, the IPO listing process and how to increase your company attractiveness for investment.
MENA Mergers 2018
May 2018 This flagship event will give you the opportunity to hear from expert speakers who will discuss and debate M&A activity in the Middle East and thewider emerging markets. Sessions will also explore future investment opportunities for dealmakers over the next year.
Darrell TraynorAssociate Partner — EY MENA Transaction Advisory [email protected]+971 4312 9446
Gregory HughesPartner — EY MENA Transaction Advisory Services — IPO [email protected]+971 4701 1851
Shahzad ShaikhSenior Manager — EY MENA Transaction Advisory [email protected]+971 4701 0858
7
IPO planning IPO execution Post-IPO
EY | Assurance | Tax | Transactions | AdvisoryAbout EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.The MENA practice of EY has been operating in the region since 1923. For more than 90 years, we have grown to more than 6,000 people united across 20 offices and 15 countries, sharing the same values and an unwavering commitment to quality. As an organization, we continue to develop outstanding leaders who deliver exceptional services to our clients and who contribute to our communities. We are proud of our accomplishments over the years, reaffirming our position as the largest and most established professional services organization in the region.
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EYG no. 06570-172GBLED 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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