Planned Saudi steel listing raises hope of IPO pick-up

IPOAl Yamamah Steel Industries has gained approval from the Saudi regulator to undergo an initial public offering (IPO) beginning at the end of April.

The company hopes to sell more than 15 million shares, representing 30% of the company’s capital. A statement from the Saudi regulator, the Capital Market Authority, says an undisclosed portion of shares will be allocated to institutional investors.

Founded in 2003, Al Yamamah Steel Industries makes steel bars and pipes for use in construction projects. The company reportedly planned to begin its IPO earlier in the year but delayed it because of volatility in the markets.

Alongside the recent IPO of Middle East Healthcare, which operates the Saudi German Hospital chain in the Gulf region, the potential offering of shares in Al Yamamah Steel Industries gives some hope of a pick-up in the region’s capital markets, where IPO activity has been softened by the low oil price.

In 2015, there were 14 offerings in the region which together raised $2.5 billion, according to consultancy EY. This was a sharp decline in number and volume from the previous year, 2014, when 27 transactions raised a total of $11.5 billion.

Mayur Pau, MENA IPO leader at EY, recently told Funds Global MENA that, “there’s no reason this year will be different to 2015”.

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