The Middle East and North Africa (Mena) IPO (initial public offering) outlook remains cautiously optimistic during the third quarter (Q3) of 2024, with five maiden offers raising $0.93bn, and another 11 private entities and five funds set to be listed by the end of this year, according to Ernst & Young (EY).

Listings in the Mena region marked a significant 76.8% year-on-year (YoY) increase in value in the review period, EY said in its latest report.

While the global IPO market overall experienced a mild slowdown during Q3-2024, the Mena market is still exhibiting a strong IPO pipeline as an additional 11 private companies across various sectors as well as five funds intend to list on the Mena exchanges by the end of this year.

In the GCC (Gulf Co-operation Council), notable companies that have made announcements regarding their listing plans include LuLu Group International on the Abu Dhabi Securities Exchange (ADX), Talabat Middle East on the Dubai Financial Market (DFM) and OQ Exploration and Production on the Muscat Stock Exchange (MSX).

In Saudi Arabia, Tamkeen Human Resources Company, Arabian Company for Agricultural and Industrial Investments and Nice One Beauty Digital Marketing have obtained approval from the Capital Market Authority (CMA).

In terms of Mena stock exchange performance, the Egyptian Exchange (EGX30) retained its top position during Q3-2024 with a 26.8% increase from the beginning of the year.

Meanwhile, the MSCI Emerging Markets Index closed Q3-2024 with a gain of 14.3% against the beginning of the year, making it the highest-performing market in the GCC. At the end of the quarter, four out of the five Mena IPOs showed a positive return compared to their IPO price.

"Despite the ongoing and challenging geopolitical environment in the Mena region, the IPO pipeline remains robust. We can expect to see a number of IPOs in the final quarter across a variety of sectors,” said Brad Watson, EY Mena Strategy and Transactions Leader.

Highlighting that the UAE recorded the region’s largest IPO for the quarter; the report said ADX welcomed the largest offering of the quarter in the Mena region with NMDC Energy, which specialises in EPC solutions and marine construction, raising $877mn and contributing 94.8% of the overall IPO proceeds.

Furthermore, environmental, social and governance (ESG) goals remains high on the agenda. The UAE has enacted a law that will become effective in May 2025, mandating companies to report carbon emissions, comply with decarbonisation strategies, and implement solutions such as renewable energy and carbon offsetting.

The law applies to all sectors, including free zones, and sets penalties for non-compliance. It also encourages research and development, and establishes a carbon credit registry to facilitate carbon trading in line with the UAE Net Zero by 2050 strategic initiative.

Saudi Arabia was the frontrunner in listing activity in the third quarter of this year with three IPOs out of five with a total fundraising of $27mn. The highest proceeds – $12mn – belonged to Tharwah Human Resources Company, followed by ASG Plastic Factory Company with $9m and Al Ashghal Almoysra Company with $6mn.

All three IPOs were listed on the Nomu – Parallel Market. The funds have been raised in the commercial and professional services as well as materials sectors. The Kingdom also witnessed two direct listings on the Nomu – Parallel Market, the Naas Petrol Factory Company and the Arabian United Float Glass (UFG) Company.

The third quarter of the year is typically quieter in terms of listing activity after the summer. However, the Mena region still witnessed five IPOs, including the first listing on the EGX since 2022, said Gregory Hughes, EY Mena IPO Leader.

"Saudi Arabia continues to lead IPO activity in the region. The Tadawul Nomu–Parallel Market has become an attractive option, offering improved fundraising opportunities for the kingdom’s growing SME or small and medium enterprises sector. For the Mena region, it is now the stock exchange with the highest number of IPOs in 2024,” he added.