Egypt, Saudi Arabia seen driving rise in middle eastern IPOs

Initial public offerings on Middle Eastern stock exchanges are set to pick up in the rest of the year and into 2016 as oil prices stabilize and market reforms encourage more companies to sell shares, according to Ernst & Young.

The opening of the Saudi Stock Exchange to foreign investors and new regulations in the United Arab Emirates that lower the proportion of stock companies have to offer investors to 30 percent from 55 percent, will encourage more share sales, Mayur Pau, Dubai-based Middle East and North Africa IPO leader at EY, said by phone Monday. A switch in the U.A.E. to having pricing based on demand, rather than at levels set by the regulator, will also make IPOs more attractive, Pau said.

“Economic reforms in the region are paving the way for a pick-up in IPO activity and we already see a large pipeline of companies in the U.A.E., Saudi Arabia and Egypt preparing for potential listings,” said Pau. “Egypt continues to benefit from political stability and there is a level of confidence there now that is attracting investors and issuers.”

Companies held 11 IPOs the MENA region in the first half of 2015, raising more than $2.4 billion, a report by EY published Tuesday shows. The number of deals fell by 11 percent from a year earlier and the value raised dropped by 1 percent as a slump in oil prices led to declines in regional stock markets, it said.