MENA IPO EyeQ1 2016

Inside Q1 2016 highlights 2

Key trends impacting MENA IPOs 4

Broader outlook 7

Summary of IPOs 8

Key events to look out for 11

Contacts 11

2 | MENA IPO Eye — Q1 2016

The MENA IPO Eye is a quarterly publication covering the MENA IPO markets.

Through the publication we intend to highlight the latest developments, market trends and outlook in IPO activity in the region, providing valuable insights for companies looking to float in the future.

To provide feedback please email mayur.pau@ae.ey.com.

Mayur Pau MENA Financial Services Leader, Strategic Growth Markets and IPO Leader

Q1 2016 highlightsLimited IPO activity continues in the MENA capital markets

The Middle East and North Africa (MENA) region witnessed two IPOs in Q1 2016, collectively raising US$615.0m, and indicative another quarter with limited IPO activity.

Capital raised through MENA firms in Q1 2016 increased by 141%, while the number of IPOs were the same (two) as Q1 2015.

The IPO of Middle East Healthcare Company on the Saudi Stock Exchange (SE, Tadawul) was the largest IPO in the quarter raising US$471.1m. It was more than three times the size of the IPO of Arabian Food Industries Company (Domty) on the Egyptian Stock Exchange (Egypt SE), the only other IPO in MENA in Q1 2016.

Two IPOs in Q1 2016

Company Domicile Sector Amount (US$m) Listing date Listing Exchange

Middle East Healthcare Company

KSA** Health care 471.1 9 March 2016 Saudi SE

Arabian Food Industries Company (Domty)

Egypt Food and beverages

143.9 17 March 2016 Egypt SE*

Total 615.0

Source: Zawya and Capital IQ. *SE: stock exchange ** Kingdom of Saudi Arabia Note: The value of the IPO for the Arabian Food Industries Company (Domty) was US$143.9m, as reported in Capital IQ on 28 March 2016. Following the cut-off date for this publication, Capital IQ has updated the value of the IPO to US$126.9m to reflect the currency devaluation during the subscription period (from Monday 14 March 2016) between the EGP and US$.

Oil price fluctuation continues to drive MENA stock market performance

Oil prices declined in January 2016 to the lowest level in several years (less than US$30 per barrel) resulting in fluctuations across the MENA capital markets. According to analysts, brent crude oil prices declined primarily due to an increase in global oil supply and a decrease in demand driven by uncertainty in the performance of the global economy.

However, the price of brent crude appears to have recovered to some extent toward the end of the quarter, trading at around US$40 per barrel and resulting in an uptick in MENA stock market performance.

Companies from Egypt and Saudi Arabia continue to lead the limited IPO activity in MENA

Egypt and Saudi Arabia continued to be the most active in MENA exchanges in Q1 2016, continuing on from 2015 when IPOs in Saudi Arabia and Egypt represented eight out 14 IPOs executed in that year.

Both markets continue to attract investors against a backdrop of increasing foreign investment, political stability, emphasis on diversification and business confidence.

“Q1 2016 witnessed limited IPO activity, in line with H2 2015, as fluctuations in the MENA capital markets continued. These fluctuations were primarily driven by low oil prices and certain global factors. Egypt and the KSA continue to lead this limited IPO activity. We believe a strong pipeline of companies in MENA continue to be waiting for the right time to go to market.”

Mayur Pau, EY MENA IPO Leader

3MENA IPO Eye — Q1 2016 |

Two IPOs in Q1 2016

Company Details

Arabian Food Industries Company (Domty) Amount raised: US$143.9m in Egypt SE Shares offered: 122,500,000 Equity offered: 49% Price range: EGP8.8–EGP9.2 per share Subscription period: 6 Mar to 17 Mar 2016

Middle East Healthcare Company Amount raised: US$471.1m in Saudi SE Shares offered: 27,612,000 Equity offered: 30% Price: SAR10 per share Subscription period: 3 Mar to 9 Mar 2016

MENA IPO activity (Q1 2012–Q1 2016*)

$82.8$1,297.1

$252.3 $339.8

$1,621.0

$482.6 $150.7$817.7

$1,283.8$1,104.8

$1,671.2

$7,426.3

$255.7

$2,120.5

$0.0$118.7

$615.0

4

6

1

3

5

9

2

10

5

11

3

8

2

10

0

2 2

0

2

4

6

8

10

12

01,0002,0003,0004,0005,0006,0007,0008,000

Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16

Volu

me

(num

ber o

f IPO

s)

Capi

tal r

aise

d (U

S$m

)

Capital raised (US$m) Volume

Source: Zawya and Capital IQ. Note: *Updated on 28 March 2016.

Q1 2016 highlights• Q1 2016 witnessed two IPOs raising a total capital of US$615.0m, with the IPO of Arabian Food Industries Company (Domty)

and Middle East Healthcare Company on the Egyptian and Saudi Stock exchanges respectively.

• Q1 2016 represented another quarter with limited IPO activity, driven by continuing fluctuations in oil prices, global economic factors and regional tensions.

Highlights from the Q4 2015 MENA IPO Eye edition• Q4 2015 witnessed two IPOs raising a total capital of US$118.7m, with the IPO of Al-Andalus Real Estate Company being the first

IPO on the Tadawul since the market opened up to foreign direct ownership.

• There were only these two IPOs in H2 2015, compared with H1 2015, which saw 12 IPOs raising a capital of US$2.3b. The decline in IPO activity is primarily due to companies deferring IPO plans, given the continuing global economic slowdown, declining oil prices and market fluctuations.

4 | MENA IPO Eye — Q1 2016

Key trends impacting MENA IPOs

Market fundamentals

MENA GDP growth (%)

2.4

2.6

3.4

2.6

3.8

1.8

3.3

2.3

4.0

3.8

2.8

3.8

0 2 4 6

MENAoil importers

MENAPoil exporters

GCC

MENA

2016f* 2015f* 2014a*

Source: IMF, October 2015. Note: *f — forecast, *a — actual.

Crude oil prices

Opec price Europe Brent crude

Oil

pric

es (U

S$ p

er b

arre

l)

010203040506070

Mar

201

5A

pr 2

015

May

201

5Ju

n 20

15Ju

l 201

5A

ug 2

015

Sep

2015

Oct

201

5N

ov 2

015

Dec

201

5Ja

n 20

16Fe

b 20

16M

ar 2

016

Sources: OPEC and Energy Information Association (EIA).

Government expenditure (US$b)

0200400600800

1,0001,200

2016f 2017f 2018f

US$

b

MENA government expenditureGCC government expenditure

938.5 944.5 977.3

543.2 544.9 557.3

Source: Business Monitor International (BMI).

• According to the International Monetary Fund (IMF), the MENA region is expected to register a GDP growth of 3.8% in 2016, compared with 2.3% in 2015.

• Against the backdrop of declining oil revenues and regional conflicts, MENA countries have revised their GDP projections.

• Crude oil price declined to US$23 per barrel in January 2016 but recovered to around US$40 towards the end of Q1 2016. The IEA estimates that prices have stabilized and should recover further during 2016.

• Key factors impacting oil price fluctuations are the continuing oil supply glut, with further supply expected to come online following the lifting of sanctions on Iran, and global oil demand from the key global markets.

• The oil price may be impacted by the meeting of OPEC and certain non-OPEC oil producers in April 2016 to discuss oil production levels.

• In Q1 2016, government expenditure in MENA is forecasted to total US$938.5b and that of the GCC, US$543.2b, by the end of 2016.

• MENA regional governments have revised spending plans to address government budget deficits.

5MENA IPO Eye — Q1 2016 |

Equity market trends

MENA PE and DY

Casablanca SE Kuwait SETunis SE Saudi SEQatar SE Abu Dhabi SEMuscat SM Egypt SEDubai FM Bahrain SE

3.3%

8.9x

2.8%

9.2x

2.5%

9.3x

3.1%

10.1x

4.3%

10.7x

5.2%

12.3x

3.7%

12.4x

3.0%

13.0x

4.6%

14.3x

4.0%

17.7x

0 5 10 15 20

DY

PE

Source: Zawya and Capital IQ. Note: As of 28 March 2016.

MENA stock market returns — Q1 2016

Stock market Market cap (US$b) Year-to-date (YTD) return to 28 March 2016 (%)

Saudi SE 383.9 -9.5%

Qatar SE 152.3 -1.3%

Abu Dhabi SE 121.4 -0.1%

Kuwait SE 88.8 -6.6%

Dubai FM 79.8 4.1%

Egypt SE 49.8 6.8%

Bahrain SE 49.1 -4.8%

Casablanca SE 48.9 6.9%

Muscat SM 22.2 2.4%

Tunis SE 9.2 9.0%

Source: Zawya and Capital IQ. Note: As of 28 March 2016.

• Several regional markets have witnessed negative YTD returns due to a global slowdown and fluctuating oil prices, with the notable exception of Dubai FM, Egypt SE and Muscat SM.

• Regional market performances have been steady compared to December 2015, with an average price-to-earnings (PE) ratio of 11.8x as of March 2016 (11.4x as of December 2015). The average dividend yield (DY) of regional stock markets as of March 2016 was 4.0% (4.1% as of December 2015).

6 | MENA IPO Eye — Q1 2016

Regional stock market performance — YTD 2016 (%)

-25

-20

-15

-10

-5

0

5

10

1 Jan 16

8 Jan 16

15 Jan 16

22 Jan 16

29 Jan 16

5 Feb 1

6

12 Feb 16

19 Feb 16

26 Feb 16

4 Mar

16

11 Mar

16

18 Mar

16

25 Mar

16

Mar

ket r

etur

n (%

cha

nge)

Abu Dhabi SE Bahrain SE Dubai FM Kuwait SE Muscat SM Qatar SE Saudi SE Egypt SE

Source: Zawya and Capital IQ. Note: *As of 27 March 2016.

MENA IPO activity versus global IPO trends

Global IPO activity witnessed a decline of 82% in capital raised in Q1 2016 to deliver a total of US$12.1b compared US$67.7b in Q4 2015. There was a decline of 70% in capital raised in Q1 2016 compared to Q1 2015 (US$39.9b).

MENA IPO activity, on the other hand, witnessed two IPOs in Q1 2016. Both IPOs collectively raised US$0.6b in Q1 2016 compared with US$0.3b in Q1 2015.

Global IPO activity (Q1 2011–Q1 2016)*

46.965.4

28.7 29.2 18.0 43.8 29.6 37.2 24.446.3

25.6

74.947.2

72.7 67.4 71.939.9

70.2

19.3

67.7

12.1

306384

293 260203 243

192 201 163 205 202

325262 335

277 366 274

430

210

346

167

0100200300400500

0

20

40

60

80

Q1 11Q2 11

Q3 11Q4 11

Q1 12Q2 12

Q3 12Q4 12

Q1 13Q2 13

Q3 13Q4 13

Q1 14Q2 14

Q3 14Q4 14

Q1 15Q2 15

Q3 15Q4 15

Q1 16

Vol

ume

(no.

of I

POs)

Capi

tal R

aise

d (U

S $b

)

Capital raised (US$b) Volume (number of IPOs)

Source: EY.

7MENA IPO Eye — Q1 2016 |

Broader outlookLimited IPO activity to continue

Given the continuing uncertainty in global economic performance and fluctuating oil prices, the outlook for MENA IPO activity is likely to remain subdued in 2016 unless oil prices and market confidence improves.

The key drivers to MENA IPO activity continue to be oil prices and oil over supply, regional geopolitical factors and the performance of the global economy.

The outcome of the meeting between OPEC and certain non-OPEC oil producers in April 2016, where they will discuss oil production levels, may have an impact on oil prices and the MENA capital markets.

MENA governments focusing on diversification and privatization

MENA regional governments have shifted their focus towards diversifying their oil-based economies and see privatization of certain government assets as a route to unlock value and encourage private and foreign investors to participate in the capital markets.

Several reforms and initiatives have been mandated by the regional governments against the backdrop of declining oil prices. For example, Saudi Arabia recently unveiled its diversification policy which included plans to diversify into sectors including IT, tourism and healthcare.

Saudi Arabia has also taken the lead in privatization efforts, including plans to privatize/IPO the remaining airports and related assets, the Saudi Stock Exchange (Tadawul) and other key utility assets.

There have also been several announcements relating to the proposed IPO of Saudi Aramco, the world’s largest oil company, with a potential enterprise value US$2.2t which is being five times bigger than Exxon Mobil.

According to Gulf News, the IPO plans of Saudi Aramco are likely to take shape in 2017 and are seen as a way to revive foreign investment into the country following the introduction of new foreign investment rules which came into force during 2015.

“ Many were saying that the idea of IPOing Aramco was just an attempt to get liquidity to cover Saudi financial needs, but that’s far from the truth. The objective is to diversify income. This is the main objective. Therefore, IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil.”

Saudi Deputy Crown Prince Mohammad Bin Salman, Bloomberg, Gulf News

Egypt — a positive IPO story

Egypt is expected to continue to be one of the few relatively active MENA IPO markets in 2016 as Egyptian companies continue to attract local and foreign investors.

The IPO pipeline still remains strong

According to Zawya Research Monitor, around 61 companies from the MENA region have plans to go public from 2016 to 2018. Some of the prominent names include Tadawul (Saudi Arabia), Daman Investments (UAE), Riyadh Cables Group of Companies (Saudi Arabia), Yamamah Steel Industries Co. (Saudi Arabia), Kuwait Airways (Kuwait), Middle East Oil Refinery (Egypt), and Jindal Shadeed Iron & Steel Company (Oman).

“ While the region’s IPO pipeline may be less robust this year than in years past, we’re still seeing significant appetite from companies interested in going to market as conditions improve.”

Mr. Karim Awad, Chief Executive Officer, EFG Hermes

Broader outlook — highlights• With continuing uncertainty in the global economic

performance and fluctuating oil prices, MENA IPO activity is likely to remain subdued in 2016 unless oil prices and market confidence improves.

• Saudi Arabia and Egypt are likely to continue to be the most active MENA IPO markets in 2016 on the basis of their respective drivers.

• We believe a strong pipeline of companies in MENA continue to be waiting for the right time to go to market.

8 | MENA IPO Eye — Q1 2016

Summary of IPOsSummary of companies listed from Q4 2014 to Q1 2016

Date (quarter)* Issuer Size of offering (US$m)

Sector Exchange

Q1 2016 — 17 March Arabian Food Industries Company (Domty) 143.89 Food and Beverages Egypt SE

Q1 2016 — 9 March Middle East Healthcare Company 471.06 Real Estate Saudi SE

Q4 2015 — 23 December Al-Andalus Real Estate Company 100.80 Real estate Saudi SE

Q4 2015 — 2 December AFMA SA 17.95 Financial services Casablanca SE

Q2 2015 — 25 June Emaar Misr 298.8 Real estate Egypt SE

Q2 2015 — 23 June Zain Iraq 0.004 Telecommunications Iraq

Q2 2015 — 9 June Saudi Ground Services Company 751.96 Transport Saudi SE

Q2 2015 — 8 June Phoenix Power Company SAOG 146.28 Power and utilities Muscat SM

Q2 2015 — 15 May Total-Maroc 73.90 Oil and gas Casablanca SE

Q2 2015 — 20 May Universal Automobile Distributors Holding 42.01 Transport Tunis SE

Q2 2015 — 11 May Integrated Diagnostics Holdings PLC 290.22 Healthcare London SE

Q2 2015 — 28 April Saudi Company for Hardware 134.40 Industrial manufacturing Saudi SE

Q2 2015 — 14 April Middle East Paper Company, Saudi Arabia 119.98 Industrial manufacturing Saudi SE

Q2 2015 — 1 April Edita Food Industries 263.00 Food and beverages Egypt SE, London SE

Q1 2015 — 4 March Orascom Construction Ltd. 185.00 Construction Egypt SE, NASDAQ Dubai

Q1 2015 — 4 January Orascom Hotels & Development 70.68 Leisure and tourism Egypt SE

Q4 2014 — 12 December Cerealis 5.34 Food and beverages Tunis SE

Q4 2014 — 3 December Résidences Dar Saada SA 127.82 Real estate Casablanca SE

Q4 2014 — 30 November Dubai Parks and Resorts PJSC 695.35 Leisure and tourism Dubai Financial Market (DFM)

Q4 2014 — 17 November Electrical Industries Company 194.30 Industrial manufacturing Saudi SE

Q4 2014 — 5 November RAK Petroleum Public Company Limited 2.91 Oil and gas Oslo SE (Norway)

Q4 2014 — 4 November Amanat Holdings PJSC 381.84 Healthcare DFM

Q4 2014 — 2 November NCB 5,998.08 Financial services Saudi SE

Q4 2014 — 15 October Al Maha Ceramics Company SAOC 20.62 Industrial manufacturing Muscat SM

Source: Zawya. Note: * As of 28 March 2016.

9MENA IPO Eye — Q1 2016 |

Companies planning or in the process of public issue during 2016–18

Country Issuer Sector

UAE Mawarid Finance P.J.S.C. Financial services

Al Bayader International LLC Industrial manufacturing

Al Mansoori Petroleum Industries LLC Industrial manufacturing

Habtoor Leighton Group Construction**

Al Qudra Holding P.J.S.C Financial services*

Alpha Tours LLC Leisure and tourism*

Arabtec Construction (L.L.C) Construction*

Daman Investments PSC Financial services*

Danube Building Materials FZCO Industrial manufacturing*

Emaar Financial Services Financial services*

Future Pipe Industries Group Limited Industrial manufacturing*

Khidmah LLC Real estate*

Network International L.L.C. Information technology*

Arqaam Capital Limited Financial services*

Emaar Hospitality Group LLC Leisure and tourism*

Saudi Arabia Saudi Airlines Cargo Transport

ACWA Power International (secondary listing) Power and utilities

National Air Services Ltd. Transport*

Saudi Aramco Total Refining and Petrochemical Co. Oil and gas

Sadara Chemical Company Oil and gas

Saudi Arabian Oil Company Oil and gas**

Leejam Sports Consumer staples

Bidaya Home Finance Financial services

Al Aqeeq Real Estate Development Company Real estate*

Al-Watania Poultry Agriculture*

Arab Paper Manufacturing Co.Ltd Industrial manufacturing*

Riyadh Cables Group of Companies Industrial manufacturing*

Yamamah Steel Industries Co. Industrial manufacturing

Tadawul Financial services

Petromin Corporation Oil and gas

10 | MENA IPO Eye — Q1 2016

Country Issuer Sector

Egypt Raya Contact Center Services

Smart Villages Development And Management Company Real estate

Wadi Group Agriculture

Misr Italia Real estate

United Bank of Egypt Financial services

Arab Investment Bank Financial services

Arabtec Egypt for Construction SAE Construction

Al Ahly Sporting Club Education

Beta Egypt Real estate**

Cairo for Development and Cars Manufacturing Transport*

Food Industries Holding Company Food and beverages*

Middle East Oil Refinery Oil and gas*

Rooya Group Real estate

Oman Sama Telecommunications Telecommunications

Connect Arabia LLC Telecommunications

Oman Qatar Insurance Company SAOC Financial services

Al Khonji Real Estate & Development L.L.C. Real estate*

Falcon Insurance Company SAOC Financial services*

Jindal Shadeed Iron & Steel Co. LLC Mining and metals*

Kunooz Oman Holding Conglomerates*

Oman Reinsurance Company S.A.O.C Financial services*

Qatar Barwa Bank Q.S.C. Financial services

QIC International L.L.C. Financial services

Qatar Airways Transport*

UrbaCon Trading & Contracting Construction**

Al-Sulaiman Holding Conglomerates*

ELAN Qatar W.L.L. Services*

Kuwait Kuwait Airways Corporation K.S.C. Transport

Algeria Biopharm SPA Healthcare

Societe des Ciments de Ain El Industrial manufacturing

Jordan Amman Stock Exchange Financial services*

Lebanon Middle East Airlines Transport*

Source: Zawya. Note: *Delayed IPO; **Rumored IPO Note: The IPO pipeline only includes companies where updated announcements, rumors have been made post Q4 2014.

11MENA IPO Eye — Q1 2016 |

Key events to look out forName of the event Date Theme

Middle Eastern M&A and Private Equity Forum 2016, Dubai

May 2016 This flagship event will provide the opportunity to hear from expert speakers who will 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.

Mayur Pau MENA Financial Services Leader, Strategic Growth Markets and IPO Leader

mayur.pau@ae.ey.com +971 4312 9446

Gregory Hughes MENA IPO Leader

gregory.hughes@bh.ey.com +973 1751 4838

Darrell Traynor Executive Director — MENA Transaction Advisory Services

darrell.traynor@ae.ey.com +971 4312 9446

Shahzad Shaikh Manager — MENA Transaction Advisory Services

shahzad.shaikh@ae.ey.com +971 4701 0858

Contacts

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The MENA practice of EY has been operating in the Region since 1923. For over 90 years, we have grown to over 6,000 people united across 20 offices and 15 countries, sharing the same values and an unwavering commitment to quality. As an organization, we continue to develop outstanding leaders who deliver exceptional services to our clients and who contribute to our communities. We are proud of our accomplishments over the years, reaffirming our position as the largest and most established professional services organization in the Region.

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EYG no. 01419-162GBL ED None

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