MENA’s PE and IPO market registers growth in H1 2015

The staggering figures come on the back of a steady economic outlook for the MENA region, which is forecast at 2.4 percent in 2015 for oil-exporting countries.

Surveying wealth creating vehicles and funds, the International Monetary Fund (IMF) has forecast a growing economic landscape in the MENA despite a slump in oil prices and increasing regional conflicts.

Oil exporting countries shall remain steady at 2.4 percent in 2015, while growth in oil importing countries will strengthen from 3.0 percent in 2014 to 4.0 percent in 2015, supported by the ongoing recovery in the eurozone’s improved domestic confidence and more accommodating policies.

The international body also posed a growth forecast for Gulf Cooperation Council (GCC) at 3.4 percent, while the non-GCC MENA countries are expected to register 2.0 percent growth in 2015. The recent economic developments entailing robust growth in non-oil sectors in the GCC, driven by diversification strategies employed by the region’s governments, will help partially offset the decline in oil prices.

Analysing wealth vehicles in the region, Private Equity (PE) activity in the MENA region has also shown an increase. With 16 PE deals worth QAR9.7 billion during H1 2015 compared to 126 deals worth QAR4.7 billion in H1 2014, the deal value has been higher compared to the same period of the previous year. Saudi Arabia and the United Arab Emirates (UAE) both witnessed the largest number of deals in H1 2015, while Algeria led in terms of value.

Commenting on the ongoing developments in the world of private equity, Al Masah Capital founder and CEO Shailesh Dash said, “Our experience in market research suggests a pickup in PE activity during H2 2015 with stabilisation in oil prices, especially in consumption-led sectors such as healthcare, education, retail and F&B. The UAE, Saudi Arabia, Lebanon and Egypt are expected to be frontrunners in PE activity during the second half of 2015.”

Sectors such as IT, retail and healthcare followed by telecom, financial services, industrial manufacturing, food and agriculture, oil and gas and media observed dynamic movements in private equity during H1 2015. A total of four exit deals were reported during H1 2015, with Egypt, Jordan, Lebanon and the UAE witnessing one deal each. Of the four exit deals, two deals, worth QAR131.8 million, were in real estate.

In terms of fund raising activities during the period, the MENA region undertook 16 IPOs worth QAR3.3 billion. As for size, Egypt-based industrial manufacturing firm ASEC Company for Mining raised the largest amount with QAR546 million, followed by Saudi Company for Hardware (QAR489.2 million) and GB Auto SAE in Egypt (QAR462.6 million).

Country-wise, Egypt recorded seven IPOs, the largest during the period, followed by four in Saudi Arabia.

In terms of value, Egypt and Saudi Arabia commanded IPOs worth QAR1.1 billion and QAR1 billion respectively. Financial services led in terms of volume and value, with six IPOs worth QAR1 billion, followed by industrial machinery with four offerings worth QAR1 billion.

The global economic activity continues to show strength. Analysts view this as substantial fuel to ignite economic growth within the MENA region, thereby providing a positive outlook for investments in major sectors such as IT, oil and gas, retail and real estate.