The Middle East and North Africa (MENA) region's initial public offering (IPO) market is forecast to remain buoyant in 2024, fueled by a healthy pipeline of companies seeking to list on regional exchanges. This positive outlook comes despite ongoing geopolitical tensions that could dampen investor sentiment.
A report by EY, a multinational professional services network, highlights the continued momentum in the MENA IPO market. While the total proceeds from IPOs in 2023 were lower compared to previous years, the number of companies going public has remained steady. This trend is expected to hold firm throughout the remainder of 2023 and into 2024, with a particularly strong pipeline emerging in Saudi Arabia.
The report attributes this positive outlook to several factors. Firstly, there is a continued confidence among investors in the MENA region. This is evidenced by the fact that over two-thirds of companies listed so far in 2023 have seen their share price increase since their IPO. This investor confidence is likely buoyed by the strategic efforts of key economies like Saudi Arabia and the United Arab Emirates (UAE) to develop their capital markets and attract foreign investment.
Secondly, the report emphasizes the dominant role of the Gulf Cooperation Council (GCC) countries in driving the MENA IPO market. Saudi Arabia and the UAE, the region's financial powerhouses, have been particularly active in attracting companies to list on their stock exchanges. The Saudi Tadawul exchange, for instance, has seen 27 companies announce their intention to go public in the near future.
However, the report acknowledges the potential headwinds that could disrupt the positive trajectory of the MENA IPO market. The ongoing geopolitical tensions in the region pose a significant risk to investor sentiment. If these tensions escalate, they could lead investors to become more cautious, potentially impacting the demand for IPOs.
Despite these challenges, the overall outlook for the MENA IPO market in 2024 remains optimistic. The strong pipeline of companies, coupled with continued investor confidence and government support for capital market development, suggests that the region is poised for another year of active IPO activity. However, the impact of geopolitical uncertainties remains a concern, and close monitoring of the regional political landscape will be essential in the coming months.