Initial public offerings offer several benefits and opportunities for companies in the Middle East
Current trends in the Middle East and Africa (MENA) region indicate a move towards reducing dependence on the oil and gas sector. Initial Public Offerings (IPOs) have consequently emerged as an ideal means of encouraging foreign as well as regional investments. According to a study by Ernst & Young (EY), the MENA region witnessed six IPOs in the second quarter of 2016, which collectively raised US$397.2million. Egypt and Saudi Arabia are estimated to lead the region in terms of IPO activity. As per EY, IPOs in Saudi Arabia and Egypt represented eight out of 14 IPOs in 2015. This trend is expected to continue in the near future.
Factors that have a significant impact on IPOs in the MENA region include oil prices,GDP growth, government expenditure and regulations, geopolitical factors and the performance of the global capital markets.In January 2016, oil prices dropped to US$ 23 per barrel—the lowest in several years.However, prices have recovered since then, and are expected to continue recovering in the foreseeable future. Stable oil prices will likely create a favourable environment for IPOs.
Going public offers companies several opportunities and advantages.It provides immediate access to much-needed capital that can be used to fund growth or pay off existing debt.It also enhances a company’s public image by increasing credibility and visibility. Additionally, an IPO makes it easy for a company to set up stock option plans for employees, which would act as an incentive and help attract talent. However, IPOs come with their own set of challenges. The key challenge faced by companies when going public is the heavy expenses incurred in the form of underwriting fees and legal, accounting and filing expenses.Proper planning is therefore essential when executing an IPO. According to Mayur Pau, a MENA IPO leader, effective IPO planning and execution increases the chances of a successful IPO transaction, helps improve business, and saves time and costs during the IPO process. UMS Conferences seeks to help companies in the MENA region form an effective IPO strategy through the Arab IPO Summit.
The Summit, which will be held from March 14 to 15 2017 in Dubai, UAE, will help companies understand the benefits, challenges and opportunities offered by IPOs in the region.It aims to bring together top companies, stock exchanges, investment banks and capital markets to share invaluable knowledge about the present business scenario and predict the future of the financial markets.Attendees will be able to network with key influencers that shape the future of regional and international economic development as well as potential investors and business leaders.