Saudi Arabia’s domestic IPOs fell 84% in 2015 with $1 bln raised

Domestic initial public offerings (IPOs) in Saudi Arabia fell 84 percent this year, with capital raised slipping from $6.4 billion in 2014 to $1 billion in 2015, according to a new report from law firm Baker & McKenzie.

Volumes fell from five listings to three this year.

The Cross-Border IPO Index by Baker & McKenzie revealed that domestic and cross-border IPO activity across the world fell this year as potential issuers remained wary of poor market performance, geopolitical uncertainty, low commodity prices, and interest rate hikes.

“Domestic issuance fell 25 percent globally in 2015, but off the back of a rise of just 2 percent in 2014. Domestic volumes also fell, by 17 percent,” the index noted.

According to the index, the Europe, Middle East and Africa (EMEA) region was the only one to register growth in domestic deals. Domestic listings grew seven percent by value in EMEA.

In the UAE, however, there were no domestic listings this year as compared to five in 2014 that raised $2.91 billion.

Egypt, however, tripled its domestic IPO activity with $360.3 million raised from three listings in 2015, in contrast with one IPO valued at $108.7 million in 2014.

Cross-border IPO activity

Globally, cross-border IPOs raised $37.8 billion from January 1 to December 10 this year, down 53 percent from 2014.

“‘Uncertainty relating to Scotland, Greece, China and market volatility resulted in a poor third quarter, while frothier M&A valuations caused several IPOs to convert to trade sales,” said Edward Bibko, chair of Baker & McKenzie’s EMEA Capital Markets Practice Group.

He added that banks are preparing for more challenges in the coming year such as British EU referendum and further interest rate hikes.

Cross-border volumes declined 32 percent to 128 deals after a 26 percent gain in 2014 and 58 percent increase in 2013, the index showed.

“After a year of inactivity, there was only one cross-border listing by a UAE issuer— the IPO of Orascom Construction Ltd, which debuted on the Egypt Stock Exchange and raised $185.01 million,” the statement said.

Saudi Arabian issuers remained active in cross-border IPO issues this year.

Meanwhile, the year also saw the first cross-border IPOs by Egyptian issuers in the past five years.

Egypt’s “two listings raised 558.14 million and were among the most notable cross-border IPOs across the EMEA region,” the statement said.

The $334 million IPO of Integrated Diagnostics Holding and the $264 million IPO of Edita Food Industries SAE were dual-listed on Egypt’s bourse and the London Stock Exchange.

"With diversification accelerating across the GCC in an effort to reduce the impact of oil price volatility, and with new commercial and financial regulations being implemented in the region, there is hope for future cross-border capital flows," said Mazen Boustany, head of banking and finance at Baker & McKenzie Habib Al-Mulla.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com