MENA IPO EyeQ1 2019

2 MENA IP0 Eye Q1 2019

Key trends

IPO

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• Historically, Q1 has been a quiet quarter across global IPO markets. However, Q1 2019 has been unusually quiet. Globally, year-over-year volumes are down 41%, while year-over-year proceeds are down 74%.

• Instability in the market in the MENA region and volatility in global equity markets have caused investors in MENA IPO markets to be cautious. Only one IPO came to market in Q1 2019 with total proceeds of US$58.3m.

• Saudi Arabia is the only country in the MENA region that witnessed IPO activity in Q1 2019 with a single IPO on the Tadawul (main market). The Capital Market Authority (CMA) had also approved the IPO of Saud Qahtani Auction Company on the Nomu parallel market. However, the IPO was canceled after releasing the prospectus as it was unsuccessful during its initial phase of offering.

• The Tadawul also witnessed the start of the initial phase of inclusion on two major international indices in March 2019: the FTSE Russell and S&P Dow Jones’ Emerging Markets indices. While inclusion in the FTSE Russell Emerging Markets index will take place in five tranches over the next 12 months, inclusion in the S&P Dow Jones Emerging Markets indices will conclude with a second phase in September 2019. This development has enhanced the exposure of Saudi Arabia to international investors.

• The structural changes to Nomu announced by the Tadawul to support the number of SME listed companies will be executed in two phases in 2019. The first phase includes provisions to allow direct listings on Nomu without an IPO. The second phase will include the listing of close-ended funds (CEFs) and real estate investment trusts (REITs) on Nomu. These changes are in alignment with the objectives of the financial sector development program envisaged by Saudi Vision 2030.

• The oversubscribed follow-on offering by Eastern Tobacco in February 2019 marked progress in the privatization agenda in Egypt. The private placement part of Eastern Tobacco’s secondary offering of a 4.5% stake was oversubscribed by 1.8 times. The first phase of the program that deals with stake sales by listed companies was delayed last year. Egypt is planning to enable the listing of four to five companies in the second phase of its share sale program which is due to happen by Q4 2019.

Note:*Had not started trading as on 31 March 2019. Source: Thomson Eikon, CapIQ and press.SE: Stock Exchange.

MENA IPO activity (Q1 2016 to Q1 2019*)

$598.0 $397.2 $197.2

$85.6

$369.3 $418.6

$91.1

$2,341.0$26.4

$328.5 $349.9 $1,021.0$133.3

$31.5$198.8

$195.9

$262.6

$603.2$553.0

2

6

1

5

11

86

9

6

9

4

0

2

4

6

8

10

12

0

1,000

2,000

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q1 19Q4 18

Vol

ume

(num

ber

of IP

Os)

Capi

tal r

aise

d (U

S$m

)

Deals (US$m) REIT listings (US$m) Volume (number of IPOs)

$64.1

7

$58.3

1

MENA GCCMENA IPO Eye

Q1 2019 reviewOne deal (no REIT listings)(83.3% decrease on Q1 2018)

One deal (no REIT listings)(80.0% decrease on Q1 2018)

Volume

US$58.3m(90.7% decrease on Q1 2018)

US$58.3m (90.3% decrease on Q1 2018)Value

Exchanges by capital raised — Q1 2019Saudi SE

US$58.3m(one deal)

Issuer (exchange) Value (return (%)*)

Al Moammar Information Systems Company (Saudi SE)

US$58.3m (NA%*)

Top issuers — Q1 2019 Top sectors by capital raised — Q1 2019

*As on 09 April 2019.Note: IPOs, including REIT listings, have been considered in each quarter, based on the subscription closing date. Companies are included (re Nomu) from the date the Nomu segment was established, 26 February 2017.

Sector Value

Software & services US$58.3m (one deal)

3MENA IP0 Eye Q1 2019

Summary of IPOs (Q1 2018 to Q1 2019)Quarter Issuer Size

(US$m) Sector Exchange

Q1 2019 — 21 Mar Al Moammar Information Systems Company 58.3 Software &

Services Saudi SE

Q4 2018 — 12 Dec AOM Invest SpA 9.5 Leisure and tourism Algeria SE

Q4 2018 — 07 Dec Mutandis SCA 44.0 Consumer goods Casablanca SE

Q4 2018 — 29 Nov Alkhabeer REIT 64.1 Real estate (REIT) Saudi SE

Q4 2018 — 24 Nov APM Terminals Bahrain B.S.C. 32.0 Transport Bahrain SE

Q4 2018 — 12 NovQatar Aluminium Manufacturing Company Q.P.S.C.

745.6 Mining and metals Qatar SE

Q4 2018 — 28 Oct National Company for Learning & Education 66.7 Consumer

services Saudi SE

Q4 2018 — 10 Oct Sarwa Capital 123.2 Financial services Egypt SE

Q3 2018 — 25 Sep Cairo for Investment & Real Estate Development Co 69.7 Real estate Egypt SE

Q3 2018 — 14 Sep Tunisie Valeurs SA 7.6 Financial services Tunis SE

Q3 2018 — 16 Aug Dhofar Generating Company S.A.O.C. 52 Power and

utilities Muscat SE

Q3 2018 — 7 Aug Leejam Sports Company 220.6 Consumer Services Saudi SE

Q2 2018 — 29 Jun RA International Group Plc 24.8 Construction London SE (AIM)

Q2 2018 — 21 Jun Shelf Drilling 225 Oil and gas Oslo SE

Q2 2018 — 3 Jun MEFIC REIT Fund 237.5 Real estate (REIT) Saudi SE

Q2 2018 — 3 May Bonyan REIT Fund 175.9 Real estate (REIT) Saudi SE

Q2 2018 — 26 Apr Immorente Invest S.A. 44 Real estate (REIT) Casablanca SE

Q2 2018 — 24 Apr CI Capital Holding Co SAE 57.2 Financial services Egypt SE

Q2 2018 — 8 Apr Swicorp Wabel REIT 95.6 Real estate (REIT) Saudi SE

Q2 2018 — 8 Apr National Building and Marketing Co. 8.7 Construction Saudi SE

(Nomu)

Q2 2018 — 2 Apr Arabia Falcon Insurance Co. 12.8 Insurance Muscat SE

Q1 2018 — 25 Mar BPE Holding For Financial Investments 26.2 Financial services Egypt SE

Q1 2018 — 6 Feb SEDCO Capital REIT 173.3 Real estate (REIT) Saudi SE

Q1 2018 — 29 Jan AlNefaie-Umm Alqura REIT 93.2 Real estate (REIT) Saudi SE

Q1 2018 — 23 Jan Jadwa REIT Saudi 126.4 Real estate (REIT) Saudi SE

Q1 2018 — 14 Jan Al Rajhi REIT 113.8 Real estate (REIT) Saudi SE

Q1 2018 — 7 Jan Derayah REIT 96.5 Real estate (REIT) Saudi SE

Note: SE — Stock Exchange. Sources: CapIQ and Thomson Eikon.

Select IPOs in pipelineIssuer CountrySaudi Stock Exchange (Tadawul) KSASaudi Aramco KSAShuaa REIT* KSATristar Transport LLC UAEEmirates Global Aluminium UAENetwork International* UAEFinablr UAEEngineering For The Petroleum & Process Industries (Enppi) EgyptBanque du Caire EgyptMIDOR EgyptEgyptian Ethylene and Derivatives Company (Ethydco) EgyptMisr Insurance EgyptHassan Allam EgyptCarbon Holdings EgyptTAQA Arabia EgyptEl Farasha for Manufacture & Printing Packing Materials EgyptMusandam Power Co SAOC OmanOman Airports Management Co SAOC OmanAman REITs OmanA’Dhahirah Generating Company OmanQatar Pharma Factory QatarRayyan Water QatarShamal Az Zour Al Oula K.S.C. KuwaitKuwait Stock Exchange Kuwait

*Listed in Q2 2019 and will be covered in more detail in the next edition

Sources: CapIQ and Thomson Eikon.

Broader outlook• As part of efforts to promote dual listing of stocks in the

Saudi and UAE financial markets, ADX signed an MoU with the Securities Depository Center Company (Edaa) in KSA.

• Development of cross listing regulations will enable companies from other GCC countries to list on Saudi Arabia’s stock market (expected to commence in Q2 2019).

• In May 2019 MSCI is due to include Saudi Arabia in its emerging markets index, which is likely to heighten interest from foreign investors.

• After a delayed start, Egypt still has its sights set on raising around US$448m (EGP8b) from the government IPO program in FY2019–20.

• EGX plans to set up a settlement firm for the futures and derivatives markets. The proposed market will make a range of financial instruments available to investors.

• Approximately six power generation and water desalination companies are planned to be listed on the Muscat Securities Market (MSM) IPO market in the next two years.

• Across MENA, although pipelines are strong along with positive opportunities ahead for IPO activity, IPO candidates may continue to proceed cautiously in Q2 2019, in view of market conditions.

Source: CapIQ, Thomson Eikon and Press.

Regional stock market performance —YTD 2019 (%)

-10%

0%

10%

20%

Mar

ket

retu

rn

(per

cent

age

chan

ge)

Jan 19 Feb 19 Mar 19

Abu Dhabi SE (AD) Bahrain SE (BSE) Dubai FM (DFM)Qatar SE Saudi SE (SASE) Egypt SEFTSE 350 Muscat MSM

Note: Updated as on 31 March 2019. Parallel Market Index (Nomu) has not been considered. Source: CapIQ.

Exchange Q1 2019 index return

Market cap (US$b)

Saudi SE 15.5% 569.5

Qatar SE –1.0% 135.3

Abu Dhabi SE 3.4% 139.1

DFM 10.8% 76.0

EGX 15.9% 25.1

BSE 8.0% 23.3

FTSE 350 10.9% 3172.6

Note: Return updated as on 09 April 2019; market cap updated as on 09 April 2019Parallel Market Index (Nomu) has not been considered.Source: Thomson Eikon.

Oil price movement (YTD 2019)

OPEC price Europe Brent crude

Oil

pric

es (U

S$ p

er b

arre

l)

29 M

arch

201

9

50

55

60

65

70

75

Jan2019

Feb2019

Mar2019

Note: OPEC — Organization of the Petroleum Exporting Countries updated up to 29 March 2019.Source: OPEC and Energy Information Association (EIA).

Contacts How EY can help

Key events

• For any company considering an IPO on a MENA or international stock exchange, it is critical to map out the IPO value journey.

• As a first step to effective IPO planning, we recommend undertaking an IPO readiness diagnostic to identify the key gaps across several areas of the business when compared with best practice and stock exchange requirements.

• A key output of the IPO readiness diagnostic is a detailed road map of activities to address the identified gaps, actioned with the assistance by EY professionals and other advisors.

• Effective IPO planning and execution will increase your chances of a successful IPO transaction, help improve your business, and save time and costs during the IPO journey.

EY IPO services

1 IPO readiness diagnostic Includes various follow-up services to help address the IPO readiness gaps identified

2 IPO execution services Dependent on listing destination, including: financial due diligence, working capital reports, feasibility studies, valuation services, financial positions and prospects, MD&A section of prospectus drafting, comfort letters and project management services

EY has dedicated MENA IPO teams with experience in executing IPO services across key exchanges in MENA and internationally.

Darrell TraynorAssociate Partner — EY MENA Transaction Advisory Servicesdarrell.traynor@ae.ey.com+971 24174571

Mayur PauPartner — EY MENA Growth Markets and Financial Services IPO Leadermayur.pau@ae.ey.com+971 4312 9446

Gregory HughesPartner — EY MENA Transaction Advisory Services — IPO Leadergregory.hughes@ae.ey.com+971 4701 1851

Meera KohliManager — EY MENA Transaction Advisory Services meera.kohli@ae.ey.com+971 4701 0952

7

IPO planning IPO execution Post-IPO

Name of the event Date Theme

Future of Finance (Riyadh, Kingdom of Saudi Arabia)

May 2019

Hear from EY specialists, regulators and educators on how to better maximize the power of digital as well as address the challenges disruption poses in finance.

Mergermarket MENA Mergers 2020(Dubai, United Arab Emirates)

April 2020

This annual event gives you the opportunity to hear from expert speakers who discuss and debate M&A activity in the Middle East and the wider emerging markets. Sessions will also explore future investment opportunities for dealmakers over the next year.

EY | Assurance | Tax | Transactions | Advisory

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EYG no. 002174-19GblED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice.

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