MENA exchanges saw an “unprecedented surge” in stock market debuts in 2021, with a record 21 companies completing IPOs in the region, EY says in its quarterly MENA IPO Eye report. Companies raised some USD 7.9 bn in debut share sales last year, more than quadruple that of 2020, it said.

Energy, financial services and utilities companies dominated last year: Saudi Arabia’s ACWA Power led the pack by raising some USD 1.2 bn in its listing on the Tadawul. ADNOC Drilling came in close behind with a USD 1.1 bn listing in 4Q2021 in Abu Dhabi. The bulk of IPO activity took place late in the year, with 13 issuances worth some USD 5.6 bn listed in 4Q2021 alone.

Abu Dhabi topped performance in the region with the ADX index up by 68% at the close of 2021. Saudi’s Tadawul came in second with its index up some 30% by the end of the year. Egypt caught some of the action but performed nowhere nearly as well as regional peers, with the EGX 30 index ending the year up only 10%.

IPO activity on the EGX wasn’t quite as hot: We saw two IPOs worth more than USD 500 mn last year, in addition to the EGX’s first ever technical listing and a stake sale as part of the state privatization program. Still, listings fell short of expectations that we would get five or six IPOs completed in 2021. State-owned tech company e-Finance came in with the EGX’s biggest IPO since 2015, raising some EGP 5.8 bn (USD 370 mn) in its listing, while higher education outfit Taaleem raised EGP 2.1 bn (USD 133.5 mn) in its EGX debut. Consumer healthcare provider Integrated Diagnostics Holding (IDH) completed the first technical listing in EGX history after it transferred 5% of the company’s existing 600 mn shares to become dual listed on the EGX and LSE. Abu Qir Fertilizers also completed a sale of some 10% of its shares for EGP 2.25 bn (USD 140 mn) late last year. We also had Emerald Real Estate’s mini-IPO on the Nilex in October.

Still, performance was way up from 2020: The EGX closed out the year up 10% YTD, a far cry from its performance in 2020 when it ended the year down over 23%.

EY’s take? 2022 looks “promising” for IPOs in Egypt: So far, the EGX has seen two listings this year: Al Khair River for Development and Investment’s (aka Nahr El Khair) shares began trading on the EGX in January, followed by Macro Group’s EGP 1.3 bn IPO the following month. The Planning Ministry announced that Egypt is still targeting to list state-owned companies every month or two. We could be seeing some more listings coming from the likes of Egyptian Chemical Industries (Kima), who might sell more shares on the EGX later this year when earnings pick up. Banque du Caire, Misr Ins. Holding’s Misr Life Ins, Heliopolis Housing and Development and Mopco could also be in the pipeline for secondary offerings at some point during 2022. On the private sector side of things, healthy food brand Abu Auf is targeting a 2Q2022 listing and non-bank financial services player Ebtikar is also reportedly planning to go to market in early 2022. Then there are the military companies Safi and Wataniya Petroleum which have been slated to float on the exchange for some time now.

You sure, EY? Although it was published around a week after Russia decided to invade Ukraine at the end of February, it appears that the report was written without taking into account the event which has sparked turmoil in global commodities markets and triggered serious concern about the direction of the global economy as it copes with surging inflation and intensifying shortages of key commodities. Add to that that we’re entering a period of rapidly rising interest rates and we’re expecting a few more bumps in the financial markets this year. We’re not saying these IPOs aren’t going to happen, but market conditions matter.

Regionally, the outlook is still shaky: Although a rebound from 2020 was underway rising interest rates, inflation and geopolitical tensions has kept “the mid-to-long-term outlook remains somewhat uncertain,” said Gregory Hughes, EY MENA IPO and transaction diligence head. State privatization initiatives and investor oversubscriptions, however, are indicative of “a period of high demand and strong investor sentiment,” Hughes added. What remains to be seen is “whether there is sufficient liquidity in the regional markets to cover the expected pipeline of large government backed IPOs in the near term,” Hughes said.