(Bloomberg) -- Investors in the Middle East’s equity capital markets are getting more choosy about where they deploy their cash after a deluge of deals, according to the region’s top-ranked bank for equity offerings.
“Liquidity for Middle Eastern deals is shrinking a bit given the amount of ECM transactions in the region,” said Mohamed Ebeid, co-chief executive officer of EFG Hermes. “There continues to be decent demand for ECM deals, but investors will become a little bit more selective.”
Bourses in Gulf Cooperation Council countries have seen 31 deals worth a combined $18.2 billion priced this year, exceeding the almost $11 billion for all of 2023, according to data compiled by Bloomberg. Still, the relentless flow of deals, including a $12.3 billion placement of Saudi Aramco shares in June, has given way to more measured activity.
For example, Saudi health-care group Dr. Soliman Abdel Kader Fakeeh Hospital Co. recorded the smallest first-day gain in June for an initial public offering raising at least $100 million in the previous 12 months, just days after Aramco’s placement was sold out. In Abu Dhabi, Alef Education Holding Plc slumped in its debut in the emirate’s first IPO of 2024.
Government entities are now allocating more capital to local equity funds to shore up liquidity, Ebeid said. While ECM-activity in the Gulf is also drawing interest from international investors, share allocations have on average been skewed toward local investors, he said.
Strong 2025
To be sure, EFG Hermes still expects to conclude another five or six transactions before the end of the year and anticipates a strong 2025, with the private sector leading supply, Ebeid said.
EFG Hermes, the investment banking arm of EFG Holding, has arranged the most equity offerings in the Middle East and North Africa so far this year, according to data compiled by Bloomberg. The Egyptian firm has 10% of the market share in share sale activity, ranking above Wall Street giants like JPMorgan Chase & Co. and overtaking HSBC Holding Plc, which topped the list in 2022 and 2023.
Notable pending transactions include a planned IPO for the exploration and production business of Oman’s OQ SAOC that could raise about $2 billion, Bloomberg News reported earlier this month. Similarly, Delivery Hero SE has hired banks to work on the listing of its Talabat unit in Dubai.
“We’re seeing a number of international companies that want to either list their local operations in Saudi or the UAE or would like to get a dual list on such exchanges,” Ebeid said.
©2024 Bloomberg L.P.
