26 ASIAN LEGAL BUSINESS – MAY 2024 WWW.LEGALBUSINESSONLINE.COM Despite a global slowdown in public issuances, the Middle East and North Africa (MENA) region has remained an oasis for capital market growth owing to healthy investor confidence, maturing markets, dynamic regulatory reforms, and strong post-issuance returns. According to an EY IPO report, MENA markets saw 48 initial public offerings (IPOs) in 2023, raising $10.7 billion in total. Q4 of 2023 itself saw 19 IPOs raise $4.9 billion in proceeds. While this was a 6 percent decrease in value and a drop of 51 percent in size compared to 2022, this was primarily attributed to the global slowdown of markets as well as the absence of particularly large-scale IPOs that had previously energised the market in 2022—namely, Americana Restaurants International, Saudi Aramco Base Oil Company, and Arabian Drilling Company. The 2024 pipeline includes 29 companies across various sectors that have announced their intention to list, with the Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE) leading the way in terms of expected volumes. KSA dominated Gulf IPO activity in the last quarter of 2023, with 14 of the 19 listings in Q4 2023 taking place on the country’s two stock exchanges – the Tadawul main market and the parallel Nomu market. The first quarter of 2024 has seen some IPO activity in the region, although lower than anticipated. The London Stock Exchange Group reported that MENA equity capital markets raised $1.2 billion in equity and equity-related issuances in Q1 2024, down 6 percent year-on-year and the lowest first-quarter total since 2021. STRONG INVESTOR CONFIDENCE Salman Al-Sudairi, the managing partner for the MENA region at international law firm Latham & Watkins, views the recent market downturn as a short-lived issue, noting that the market’s underlying strength and growing investor interest in IPOs signal a resilient economic landscape poised for recover. “The global slowdown has not had a significant impact on the number of issuances, and there is a huge pipeline of potential issuances coming in across the Saudi and UAE markets”, says AlSudairi. “We as a law firm are getting requests for proposals (RFPs) on a weekly basis, and it’s the same with investment banks. There is also an MIDDLE EAST The Middle East’s regional IPO markets are flourishing despite a global slowdown and geopolitical instability owing to the region’s long-term structural and regulatory reforms, a maturing diversified market and strong investor confidence. BY NIMITT DIXIT IPO OASIS Image: VideoFlow/Shutterstock.com
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