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EY: Four MENA IPOs raise US $349.9m in Q3 2018
- Saudi Arabia led the MENA IPO activity raising US$220.6m
- Muscat, Egypt, and Tunis recorded one IPO each raising US $129.3m
- Two deals in the GCC raise US$272.6m
The MENA region raised US$349.9m through four IPOs, in Q3 2018, according to the latest EY MENA IPO report. Compared to Q3 2017, IPO value saw an increase year-on-year by 21.9%, while activity declined by 33.3%.
Phil Gandier, MENA Transactions Leader, EY, says: “In light of fluctuating oil prices and
Phil Gandier – EY MENA Transactions Leader
headwinds in the economy, IPO activity in the MENA region has been slow from Q1 to Q3 2018. However, it is positive to see that IPO value increased year-on-year in Q3, especially
when we’ve seen several entities across MENA delaying their plans for IPOs in 2018 due to various factors including (but not limited to) regulatory and global trade concerns and uncertain market conditions in a rising interest rate environment.”
Two GCC IPO listings in Q3 2018, market updates in Abu Dhabi and Kuwait
According to the report, Saudi Arabia led the MENA IPO activity in Q3 with the IPO of Leejam Sports Company on the Saudi Stock Exchange, which raised US$220.6m, making it the biggest IPO in the third quarter. In the previous quarter, four companies went public, three of which were REIT listings on the Tadawul.
Additionally, in the GCC region, Oman’s Muscat Securities Market (MSM) had a single IPO listing for Dhofar Generating Company in the power and utility sector raising US$52.0m.
Gregory Hughes, MENA IPO Leader, EY, says “While IPO performance has been slow this year, regulatory updates and inclusions in global indices have been positive for the GCC IPO market. FTSE Russell has issued a statement that it plans to include Tadawul as a secondary emerging market index in 2019. This follows the September 2018 announcement where MSCI signed an agreement with Tadawul to jointly launch a tradable index in Q4 2018, which is intended to function as a platform for investment instruments, covering exchange-traded funds (ETFs).”
“Looking to Oman, increased clarity in regulatory processes in the power and water sectors has created transparent competition in the sectors, encouraging developers and investors. With as many as six power generation and water desalination companies planning IPOs within three years, Oman’s IPO pipeline looks very healthy,” continues Greg.
The Abu Dhabi Securities Exchange has announced plans to roll out futures trading in 2019 to boost investments. The stock exchange is connecting with seven companies that have IPOs on their agenda.
There have also been talks of MSCI reclassifying the Kuwait Stock Exchange as an emerging market in 2019. The stock exchange is currently a frontier market.
North Africa sees two IPO listings
In the wider MENA region, Egypt and Tunisia recorded one deal each. The IPO of Cairo for Investment & Real Estate Development Company raised US$69.7m. The IPO program laid out by the Egyptian Government, which plans to list public sector companies on its stock exchange, has strengthened the prospects of future IPOs in the country that would promote local and foreign capital inflows. The Government also has plans to introduce an IPO program offering minority stakes of state-owned and private companies in various sectors, in the next three to five years.
Further, in North Africa, the Tunis Stock Exchange saw the IPO of Tunisie Valeurs in Q3 2018 raising US$7.6m, following a yearlong gap of no activity. The improved classification of Tunisia by the FTSE Russell and MSCI, along with the World Federation of Exchanges (WFE) member status, received in October 2018, has reinforced the attraction of Tunisia for foreign investment.
Global IPO performance
Globally, IPO activity saw a significant slowdown in Q3 2018, with 302 IPOs raising US$47.1b, marking a decrease of 15% and 2% respectively, compared to Q2 2018. Current market and investor confidence fluctuations are causing companies to delay or pull out of planned IPOs in Q4 2018 despite the recovery in oil prices. Reasons for this could be current market and global trade uncertainties.
“Globally, the third quarter has been a relatively quieter period for IPO activity driven by geopolitical tensions, trade issues between the US and China and the looming exit of the UK from the European Union, all of which have dampened investor confidence in the short term,” concludes Phil.
Lendo, a Saudi Arabia-based Shariah-compliant crowdlending marketplace, has signed a Memorandum of Understanding (MOU) today with J.P. Morgan to improve access to financing for small and medium-sized enterprises (SMEs) across the country.
The MOU was signed during 24 Fintech, a premier fintech event that brings together industry leaders, innovators, and investors in Riyadh.
J.P. Morgan and Lendo are working together on potential opportunities to support the SME sector in Saudi Arabia in growing and sustaining the remarkable demand in this market.
“This strategic collaboration with J.P. Morgan, a pioneer in the financial industry, marks a significant milestone for Lendo,” said Osama Alraee, CEO and co-founder of Lendo. “By combining our strengths, we’ll deliver cutting-edge financial solutions to SMEs, supporting their growth and contributing directly to the realization of Saudi Arabia’s Vision 2030.”
The SME financing landscape in MENA presents a substantial market opportunity as limited financial access continues to restrict the growth of the region’s businesses, with commercial banks hesitant to issue loans to SMEs at scale, resulting in a high percentage of declined financing requests annually.
The total SME financing gap in developing countries is estimated to be approximately $5.2 trillion, according to the International Finance Corporation (IFC).
Lendo’s debt crowdfunding platform aims to bridge the financing gap for SMEs, aligning with Saudi Vision 2030’s goal to significantly expand SME lending from 4% in 2018 to 20% by 2030.
According to the latest available report from the Saudi Central Bank (SAMA), the total value of debt crowdfunding in Saudi Arabia surged from SAR 1.4 million in 2019 to SAR 771 million in 2022, marking a remarkable growth.
Lendo raised SAR 132 million ($35.2 million) in total funding from leading investors, including the most recent Series B led by Sanabil Investments, a wholly-owned company by the Public Investment Fund (PIF).
Since its inception in December 2019, Saudi fintech Lendo has processed over 5,000 financing transactions on its platform, providing over SAR 2 billion ($600 million) in financing to SMEs and generating SAR 280 million ($74 million) in returns for investors.
TA Telecom, a prominent player in the Middle East’s tech sector, has unveiled AnteThink, an AI-driven tool designed to enhance decision-making processes for individuals and businesses alike.
With a history of influencing the tech landscape through various initiatives, including advanced mobile solutions, high-volume payment platforms, and ventures in e-commerce, fintech, and analytics, TA Telecom has carved a niche for itself. Serving a vast user base of 40 million and processing an impressive 15 billion transactions across its platforms, TA Telecom has cemented its position as a tech industry leader, with some of its ventures achieving the status of Y Combinator companies.
Established in 2000, TA Telecom has emerged as a prominent player in the technology sector. With over 40 million users and processing 15 billion transactions annually, TA Telecom has made a notable impact. Recognized for its contributions by the Financial Times and featured on Deloitte’s list of fastest-growing tech companies in EMEA, TA Telecom is known for its adaptability and forward-thinking approach in the ever-evolving global tech landscape.
Sameh Ibrahim, CEO of TA Telecom, highlights the potential of AnteThink: “AnteThink reflects our commitment to leverage technology for practical impact. It aims to provide clarity and confidence in decision-making, whether in the professional or personal sphere. AnteThink is a tool that can empower startup founders, executives, and individuals to make more informed choices, alleviating the stress and uncertainty often associated with critical decision-making.”
Mostafa Ashour, CEO of Y Combinator-backed startup NowPay, shared his perspective on AnteThink: “AnteThink transformed our strategic planning, allowing us to explore various scenarios and prepare for different outcomes. It has strengthened our decision-making process, helping us navigate the complexities of the business landscape.”
AnteThink embodies TA Telecom’s commitment to innovation, focusing on supporting the startup ecosystem. The tool is tailored to help leaders and executives navigate the complexities of business management and strategic development by providing a clear picture of potential outcomes.
Key Features of AnteThink include:
1. Second Order Mode: Offering a comprehensive analysis of broader impacts, fostering a strategic mindset for long-term success.
2. Optionality Mode: Enabling detailed evaluation and comparison of different choices to ensure decisions align with strategic objectives and values.
3. Inversion Mode: Focusing on identifying and mitigating potential risks, thereby strengthening risk management strategies.
Credit: Antethink
AnteThink’s advanced AI technology aims to assist decision-makers with insightful analytics, offering guidance through the decision-making process.
Selina Bieber, the Senior Director of Global Markets at GoDaddy, has predicted a significant increase in Egypt’s e-commerce revenue. By 2028, it could reach $9.88 billion.
Godaddy is forming strategic partnerships and launching initiatives to help local entrepreneurs. These efforts align with Egypt’s digital transformation goals and its Vision 2030.
In an interview with the Arabic financial news “Amwal Al Ghad,” Bieber spoke about GoDaddy’s plans and how they match Egypt’s 2023 strategy. She highlighted the company’s aim to provide effective, easy-to-use digital tools and services. By 2024, GoDaddy wants to serve more customers in Egypt by making its digital tools more widespread.
The company is working closely with the Egyptian government, especially the Ministry of Planning. They are offering training programs to improve the digital skills of startups and existing businesses. GoDaddy’s services in Egypt include domain registration, web hosting, e-commerce solutions, and digital marketing tools.
Recent surveys support Bieber’s positive outlook for e-commerce in Egypt. They show a clear trend towards digital strategies among small businesses. Many are realizing the importance of having an online presence for their growth and success.
As GoDaddy continues its partnerships and supports government digital initiatives, its influence on Egypt’s digital landscape is growing. The company is committed to sustainability and reducing its carbon footprint. It aims not just for business growth but also to contribute to a sustainable and thriving digital economy in Egypt.
The 2028 projection indicates a vast potential for e-commerce, with GoDaddy playing a key role in this digital evolution.
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