Saudi Arabia leads IPOs in MENA region despite Q3 2023 dip

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Saudi Arabia leads IPOs in MENA region despite Q3 2023 dip
Credit: © Reuters.

Despite a decrease in Initial Public Offerings (IPOs) in the Middle East and North Africa (MENA) region during Q3 2023, Saudi Arabia has taken the lead with five of the six listings, according to the EY MENA IPO Eye Q3 2023 report. The third quarter saw six IPOs raising $523 million, marking a 14% and 66% decrease in numbers and proceeds respectively from Q3 2022.

The report noted that by the end of Q3 2023, there were 29 Year-to-Date (YTD) IPOs in MENA, totaling $5.8 billion, indicating a 6% volume reduction and a 61% funds raised decline year-on-year. Despite the decrease, all listings experienced positive first-day returns.

Saudi Arabia's five listings during this period raised $330 million. Lumi Rental Co., listed on Tadawul Main Market, contributed significantly to this amount, raising $291 million. Other companies listed on Nomu – Parallel Market included Paper Home Co., Al Rashid Industrial Co., and Sumou Real Estate Co., which transitioned to the Tadawul Main Market in September 2023.

EY MENA expressed optimism for the forthcoming quarters, highlighting a promising IPO pipeline for Q4 2023 and into 2024. They pointed towards Saudi Arabia as the driving force behind this trend, where 27 companies are planning to list on Tadawul.

As part of Vision 2030, Saudi Arabia is shifting its economy away from oil. This effort was evident in three transportation sector IPOs contributing $302 million of total proceeds during this period. Munawla Cargo Co. reported the highest first-day gain at 69%.

Meanwhile, Qatar Stock Exchange featured the second-largest MENA IPO of Q3 2023 with MEEZA QSTP-LLC raising $193 million. ESG initiatives are gaining prominence in the region ahead of COP28.

The fourth quarter of 2023 started with three Saudi listings, including ADES Holding Company, Atlas (NYSE: ATCO ) Elevators General Trading & Contracting Co., and Intelligent Oud Co for Trading. These listings indicate a continued investor confidence, as noted by Brad Watson of EY, despite a slower Q3. The growth of sustainability initiatives and companies focusing on ESG reporting is also expected to contribute to the region's economic diversification efforts.

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